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Cape Town - The rand has cheered President Jacob Zuma's withdrawal of his interdict to halt the release of the public protector's report into state capture by his close friends the Guptas, strengthening to below R13.50/$.
Zuma's surprise move came as pressure mounted from politicians, business leaders and the public and as thousands of people took to the streets to demand an end to corruption and state capture.
READ: Zuma drops court bid as protests escalate
By 11:45 the local unit was trading 1% firmer at R13.48, from its overnight close of R13.61 in New York. It earlier traded as low as R13.42/$.
The rand started its latest surge after the National Prosecuting Authority on Monday dropped fraud charges against Finance Minister Pravin Gordhan and his two co-accused Ivan Pillay and Oupa Magashule.
READ: Zuma ‘weakened’ by NPA-Gordhan saga - Daniel Silke
On October 11, when the NPA announced it would charge the trio, the rand skyrocketed to R14.36 against the dollar.
The political noose is now beginning to tighten around Zuma’s neck, said political analyst Daniel Silke.
"Multiple pressures are mounting to shorten his longevity in office as a confluence of forces mobilises to unseat him.
"ANC politics is today entering a dramatic and somewhat combustible era in which a variety of interests will pitch for power and access to resources, while others will seek a broader coalition around the national interest and a possible reboot of not only ANC politics, but broader economic policy too," he said.
READ: Political noose tightens around Zuma's neck
Goldman Sachs warned last week that while Gordhan's credible mini budget could please rating agencies seeking tighter fiscal discipline, continued political infighting could still lead to a credit rating downgrade in December.
READ:Friedman: Root causes of limp economic growth not being tackled
But despite the noisy political scene, rating agencies such as Moody's maintained that South African institutions remain strong.
READ: Over 15 000 firms support Gordhan - Employers' Association
Silke said despite being president, Zuma is increasingly stymied in any decision-making. "With his opponents emboldened, he is increasingly not only a lame duck but also a political albatross around his own party’s neck. This is a stalemate the country simply cannot afford."
The good news is that the country’s future path is not narrowly downhill, said Silke.
READ: ‘Wheels coming off’ SA state, says Mandela Foundation
"The discourse is more robust, critical and indeed hopeful than in recent years. There are alternative political and economic trajectories for us all. And a committed society both within and outside the narrow confines of parliamentary politics is beginning to emerge.
"The current paralysis is likely to give way to change – and managing that change will have its own stresses and tensions. But clearly, the current malaise needs to be broken and we are just a little closer to that day."
