Rand plunges as Gordhan saga intensifies | Fin24
In partnership with
  • Another VAT hike?

    Absa warns that govt may again announce an increase in value added tax in next month's Budget.

  • SA Revenue Service

    The tax agency says a unit that tackles illicit financial flows has recovered R2.6bn since April 2019.

  • State Capture Inquiry

    Former Eskom chairperson Zola Tsotsi says Tony Gupta threatened to have him removed.


Rand plunges as Gordhan saga intensifies

Oct 11 2016 20:47

Johannesburg - The rand plunged on Tuesday after prosecutors ordered Finance Minister Pravin Gordhan to appear in court to face fraud charges, adding to months of political uncertainty.

Stocks closed slightly higher led by a stronger gold sector benefiting from weakness in the rand.

By the close of the market, the rand weakened to its lowest in almost a month down 4% to 14.43 per dollar.

The currency fell sharply after prosecutors said Gordhan must appear in court next month over allegations he broke public finance rules by granting a colleague early retirement.

In December, President Jacob Zuma replaced the then finance minister with a politically loyal unknown, but within days appointed Gordhan after an investor backlash.

The latest political instability comes as the finance minister is expected to deliver his medium-term budget policy statement, in just over two weeks.

"A much weaker currency will add to inflationary pressures, and could force us to revaluate our view that the South African Reserve Bank's tightening cycle has come to a close," said Capital Economics economist John Ashbourne.

Government bonds weakened alongside the currency with the yield for the benchmark issue due in 2026 rising 23.5 basis point to 8.93%.

On the stock market, the benchmark Top-40 index rose 0.62% to 45 395 points, while the All-Share index gained 0.43% to 51 898 points.

The political uncertainty and weaker rand made gold mining stocks more attractive as investors moved into risk-off assets.

"We are seeing a move into safe haven assets traditionally like gold," said Independent Securities fund manager Mark Loubser

Harmony Gold gained 3.54% to R41.52 and AngloGold Ashanti was up 1.7% at R187.63.

Among the other gainers was Northam Platinum which rose 4.27% to R48.30 after the company said it had acquired a mining right from Anglo American Platinum for R1bn ($72m).

But financials weakened, with the banking index down 3.6% and Nedbank, the biggest loser among the bluechips, shedding 4.4% to R216.63.

Trade was lively with around 362 million shares changing hands, compared with last year's daily average of 296 million, according to preliminary bourse data.

This infographic tracks the movements of the rand since Zuma announced that Des van Rooyen will replace Nhlanhla Nene as minister of finance.

Read Fin24's top stories trending on Twitter:

pravin gordhan  |  nhlanhla ­nene  |  rand  |  markets  |  currencies

Small breather for stocks

2020-01-24 17:42


Company Snapshot

Voting Booth

How concerned are you about ransomware attacks?

Previous results · Suggest a vote