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Cape Town – Four graphs showing movements in the rand/dollar exchange rate over the past four years reveal how jittery the currency gets ahead of President Jacob Zuma’s State of the Nation Address (SONA).
READ: Rand treads water as violence threat hangs over SONA
The rand’s excellent run paused on Thursday ahead of Zuma’s SONA later in the day, trading at R13.48/$ after trading as low as R13.24/$ on 25 January.
The rand’s edge higher ahead of Zuma’s SONA has been an annual occurrence, with 2015 seeing the biggest swing in value, moving from under R11.30/$ to nearly R12/$ in the week leading up to the SONA.
The SONA was held on 13 February 2014, 12 February 2015 and 11 February 2016. The four graphs also reveals how the value of the rand has improved since 2016, which was caused by the firing of Nhlanhla Nene from Treasury as well as the Chinese market crisis.
Rand in 2017:
Rand in 2016:
Rand in 2015:
Rand in 2014:
Scuffles make for good TV, but not for markets
Regarding today’s SONA, Rand Merchant Bank analyst John Cairns said the market should brace itself for disruptions in parliament just as Zuma starts his SONA.
“This may well see the EFF expelled, again,” he said. “That makes for good TV but probably not for market movements. Any violence beyond mere scuffles between EFF and ANC supporters that will be converging on parliament would be rand negative.
“The speech itself will probably be bland, with the only meaningful economic comment focussing on the new minimum wage semi-agreement, while the ‘fees must fall’ issue will be avoided by referencing the study group looking into the matter.
“Select word choice – ‘women President’ and ‘white monopoly capital’ - would show the President’s actual or self-perceived power in the factional war.”
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