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South African rand recovers as Zuma says not at war with finmin
7:07 CAT | 01 Mar 2016
Reuters /South African Finance Minister Pravin Gordhan delivers his 2016 Budget speech to parliament in Cape Town, in this file picture taken February 24, 2016.
South Africa’s rand firmed against the dollar on Monday after President Jacob Zuma said he was not at war with Finance Minister Pravin Gordhan, following media reports of a fallout.
The currency fell nearly 4 percent on Friday, its biggest daily loss since 2011, after Gordhan said there were attempts to discredit him and the integrity of the Treasury.
Gordhan’s statement followed a newspaper report which quoted sources as saying he had threatened to resign after receiving a letter from the elite Hawks police unit questioning his knowledge of a suspected rogue unit at the revenue service.
This followed media reports of a clash between Gordhan and the head of the South African Revenue Service (SARS).
The Hawks also said they were not investigating Gordhan, and there was no case against the minister.
“The media has incorrectly reported, among other things, that there is a war at SARS and that the President and the Minister of Finance are somehow at war. This is a total fabrication and mischievous sensationalism,” the presidency said in a statement.
“The President wishes to emphasise that Minister Gordhan remains the Minister of Finance and any positing that the position of the Minister is under any threat is dismissed with the contempt it deserves.”
As of 1344 GMT, the rand had firmed 1.45 percent to 15.9260 versus the dollar from Friday’s close of 16.1600.
Government bonds also recovered. The yield on the benchmark instrument due in 2026, which soared as much as 28 basis points in early trade, was up 4.5 basis points to 9.41 percent as of 1434 GMT.
“It is a case of correction following knee jerk selling on Friday. The markets will continue to keep a close eye on narrative and look for further confirmation Gordhan will be allowed to do his job,” NKC African Economics economist Bart Stemmet said.
On the stock market, both the Top-40 index and the broader All-share were largely unchanged.
Barclays Africa Group Ltd fell as much 6 percent when the market opened, and traded 5 percent lower after Barclays Plc said on Sunday its board was evaluating strategic options in relation to its shareholding in its African business.
Source: Reuters
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