Local political news boosts the rand
The local currency seems to have benefited slightly after some ANC politicians withdrew from the party’s parliament nominations list
The rand was slightly stronger against the dollar on Wednesday afternoon after some ANC politicians asked to be removed from the ANC’s MP list.
A day before they were due to be sworn in as MPs, former National Assembly speaker Baleka Mbete and former home affairs minister Malusi Gigaba pulled out of the ANC’s nomination list.
Reasons for their withdrawals are not yet clear. The ANC has been criticised for nominating ANC members who have been implicated in state capture allegations, including Gigaba and environmental affairs minister Nomvula Mokonyane.
Ramaphosa said Deputy President David Mabuza had asked to “postpone” being sworn in as an MP on Wednesday, as he wants to address allegations against him before the ANC integrity committee
The rand was the second best performing emerging market currency on Wednesday, but analysts said the boost from local political developments was small, and investors are still waiting to see the size and composition of Ramaphosa’s new cabinet.
Citigroup economist Gina Schoeman said the latest political developments are setting up an expectation within the market regarding the kind of cabinet Ramaphosa will appoint. She said the new cabinet would have to tick certain boxes in order to reap positive sentiment for the rand, including a reduced size, a good finance minister and a good-enough cabinet that is capable and can execute Ramaphosa’s promised economic reforms.
At 1.40pm, the rand gained 0.13% to R14.3740/$, flat at R16.0523/€ and up 0.53% to R18.1904/£, as British Prime Minister Theresa May is set to present her arguments for a new Brexit deal before parliament later on Wednesday. The euro was flat at $1.1168.
Global markets continue to keep an eye out for developments in the US-China trade war, which has dampened sentiment in the past weeks.
Gold was unchanged at $1,275.15/oz and platinum fell 0.99% to $808.49.
Brent crude fell 0.22% to $71.84 a barrel.
The benchmark R186 government bond was stronger, with its yield falling 5.5 basis points to 8.41%. Bond yields move inversely to bond prices.
Figures released by Statistics SA on Wednesday showed that consumer inflation decelerated by 0.1 percentage point from March to 4.4% in April.