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Cape Town – The rand rallied to under R13.20 to the US dollar after Speaker of the National Assembly Baleka Mbete announced that the vote of no confidence in President Jacob Zuma will be done by secret ballot.
The unit was trading at R13.38 against the greenback shortly before the surprise announcement.
By 15:46 the unit was trading 1.8% firmer from its previous close at R13.19/$ after reaching R13.18.
Mbete, who did not allow follow-up questions at a media briefing on Monday afternoon, said her decision is by no means a precedent for the way in which voting will take place in Parliament in future, but that she had to take a number of factors into account in making the decision.
A minimum of 50 ANC MPs of the total number of 400 National Assembly members will need to vote against the president for a no confidence motion to be successful.
It will be the ninth motion of no confidence since Zuma became president in 2009.
The previous motions were among other things as a result of exorbitant security upgrades to Zuma’s homestead in Nkandla, his firing of Nhlanhla Nene as finance minister and his closeness with the Gupta family. The president easily survived all these motions as ANC MPs toed the party line.
The ANC’s national executive committee ordered its MPs to vote to keep Zuma as president of the country. Failure to do so could result in disciplinary action against those who don’t adhere to the instruction.
Analysts said on Monday the no confidence vote against Zuma and the ratings review by Moody’s could make it a watershed week for the rand.
“This could be a watershed week for the rand with the possibility of two-way trading being very high,” TreasuryOne explained, while Rand Merchant Bank analyst Isaah Mhlanga said “this week we have our own moment of reckoning”.
The no confidence vote will fail regardless of whether it ends up being a secret vote, said Nomura emerging markets economist Peter Attard Montalto. Looking at the absolute probabilities of the motion passing, both local and foreign investors are in line with Nomura at around 14%, while political analysts are lower still with a 7.5% chance.
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