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Rand firms on rate hike, Cabinet reshuffle

Nov 22 2018 16:18

The rand which made gains on the back of the rates announcement, held firm on President Cyril Ramaphosa's Cabinet reshuffle.

Just before the start of SA Reserve Bank (SARB) governor Lesetja Kganyago's speech, the rand was changing hands at R13.84/$. After the announcement the rand soon traded stronger at R13.74 to the greenback.

The repo rate increased to 6.75% and the prime rate to 10.25%. Following the rate announcement, TreasuryONE said the rand was still benefiting from a better risk sentiment.

Shortly after the rates decision Ramaphosa announced the changes to Cabinet from the Union Buildings in Pretoria. The reshuffle was as a result of the death of Environmental Affairs minister Edna Molewa and the more recent resignation of Home Affairs Minister Malusi Gigaba.

The president announced that Dr Siyabonga Cwele, minister of telecommunications is the new minister of home affairs. Nomvula Mokonyane will take the position as minister of environmental affairs and Stella Ndabeni-Abrahams will take over the Communications portfolio, which has since been merged with Telecommunications.

The president said that a decision was taken to merge the ministries of communications and telecommunications and the postal service into a single ministry.

This is to ensure "better alignment and coordination" of matters critical to future of the economy, particularly in context of the fourth industrial revolution, Ramaphosa said. 

The two departments will remain separate until the fifth administration, following the national elections next year, Ramaphosa said. The president also announced the resignation of Deputy Minister of Energy Thembi Majola, with effect form January 1, 2019 to attend to family matters.

The rand did not move on the news, and was trading at R13.79/$ TreasuryOne noted.

Bianca Botes, corporate treasury manager at Peregrine Treasury Solutions, said the market responded well to the president's Cabinet changes.

"We have become accustomed to a reshuffle being perceived as negative, that this is quite a refreshing change."

By 16:15 the rand was trading at R13.74, more than a percent (1.18%) stronger than its opening of R13.90.

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