South Africa’s rand was a touch softer than its previous close against the dollar on Tuesday, amid reports that beleaguered President Jacob Zuma was resisting calls by his ruling ANC president to step down.
Zuma, who has faced allegations of using his political power for personal gain, is under increasing pressure to relinquish his post ahead of 2019 national elections, which are likely to see his deputy and newly elected African National Congress leader Cyril Ramaphosa become South Africa’s next president.
The rand has rallied strongly since the December election of Ramaphosa, a former businessman respected by investors.
But on Tuesday it was slightly weaker at 11.92 against the U.S. dollar compared with Monday’s close at 11.89, after an ANC meeting to discuss Zuma’s fate yielded no immediate news.
The local currency was however up from its earlier low point of 11.99 as optimism remained that the president, who denies charges of corruption, would eventually cave in and step down.
The ANC was due to hold a news conference on the issue at 2 pm on Tuesday.
“An early Zuma exit (this week) could see the rand strengthen to R11.70/USD, and then move towards R11.00/USD,” Investec economist Annabel Bishop said.
Bishop said this was dependent on Ramaphosa assuming the presidency of South Africa “without any conditions that hamper his ability to follow the free market reforms necessary to avoid further credit rating downgrades, eradicate corruption and deliver rapid economic growth”.
Rating agencies have cut South Africa’s sovereign credit standing to sub-investment grade in the case of Fitch and S&P, amid concerns that Zuma’s government lacks to will to rein in its budget deficit and pursue policies that will stimulate the ailing economy.
– African News Agency (ANA)