S.Africa’s rand slides near one-month low as Zuma survives no-confidence vote

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S.Africa’s rand slides near one-month low as Zuma survives no-confidence vote

8:00 CAT | 09 Aug 2017

Reuters (File photo) / A street money changer counts South African Rands in Harare, Zimbabwe, May 5, 2016

South Africa’s rand weakened nearly 1.5 percent on Tuesday evening after President Jacob Zuma survived a no-confidence vote in parliament by secret ballot with markets reacting almost immediately and sending the unit near a one-month low.

At 1730 GMT the rand had weakened 1.4 percent to 13.4050 per dollar, having traded as firm as 13.1525 in the session as some participants bought options in the currency to bag profits should the motion fail.

U.S.-listed ishares of South African ETFs were down as much as one percent.

“The USD/ZAR immediately jumped higher to close to 13.40 and we expect it to keep grinding higher before rand stabilizes,” said head of emerging markets at TD Securities, Cristian Maggio.

“While Zuma’s position is becoming increasingly precarious, which could be rand positive going forward, we think it may be too early to look at potential rand appreciation now,” Maggio said.

Zuma survived a no-confidence motion against him in parliament on Tuesday by winning 198 votes to the opposition’s 177 votes as African National Congress lawmakers rallied to his support.

“While the consensus had been that Zuma’s survival of the no-confidence motion would strengthen his hand ahead of the elective conference, the sub-200 number of ‘no’ votes calls this into question,” said Standard Charted Africa analyst Razia Khan.

On Monday the rand gained as much as 1.5 percent to its firmest in a week after the parliamentary speaker allowed a secret ballot in the opposition-sponsored no-confidence vote against Zuma.

In fixed income bonds were largely unmoved, with the yield on the 2026 paper down 0.5 basis point at 8.565 percent.

Source: Reuters