CAPE TOWN – The rand got a much-needed boost on Wednesday evening, strengthening on President Cyril Ramaphosa’s announcement of a significantly reduced cabinet.
The domestic currency strengthened 7c from R14.72 a dollar prior to the president’s announcement to R14.65 a dollar at 10pm.
Of note is that Ramaphosa retained Tito Mboweni as Minister of Finance and appointed David Masondo as Deputy Minister of Finance to replace Mondli Gungubele.
In his announcement, Ramaphosa said: “If we are to make effective progress in building the South Africa that we all want, it is important that we deploy into positions of responsibility people who are committed, capable and hard-working, and who have integrity.
In appointing a new national executive, I have taken a number of considerations into account, including experience, continuity, competence, generational mix and demographic and regional diversity.”
Rebalance Fund Managers chief economist Chris Harmse said the perceived indecisiveness of the President to announce his cabinet and the saga around the reinstatement of David Mabuza to parliament, after a meeting with the parliament’s ethical seemed to clear him from wrongdoing, had contributed to domestic currency’s alarming depreciation.
“Financial markets are also concern over the Pravin Gordon saga. It is believed by many that Public Protector Busisiwe Mkhwebane may have set President Cyril Ramaphosa up for an attack from within the ANC over the future of Pravin Gordhan,” said Harmse.
The rand quickly broke through key technical levels on Tuesday, declining 2 percent against the greenback to reach R14.71 a dollar, as market participants sold the domestic currency as a proxy for other emerging market currencies.
BUSINESS REPORT ONLINE