South African President Jacob Zuma’s second cabinet reshuffle in less than a year drew a sharp reaction from the rand with the local unit weakening to R13.38 against the US dollar after news of the reshuffle broke.
The local currency was bid at R13.31 against the greenback before the presidency issued a statement on the reshuffle, with the major causality being the minister of higher education, Blade Nzimande who moves out of the cabinet altogether.
What added to dollar strength has by rumors from The White House that a more hawkish Fed chair in the form of economist John Taylor is the new front-runner to replace Janet Yellen. The news has caused local bonds to slightly steepen in line with US Treasuries which has helped to halt the Rand’s recovery.
“The rand is tracking other emerging currencies.
There haven’t been much flows from offshore but this is a normal market retracement as the market seems to have been caught a touch long,” said Standard Bank currency trader Oliver Alwar. A firmer gold price also aided the rand’s bounce from its worst levels since April, but Alwar said the rally would be short-lived and the currency would likely approach the R13.95 technical support mark this week.
BUSINESS REPORT ONLINE