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Rand plunges in early trade amid Cabinet uncertainty, trade war worries

May 29 2019 09:36

The rand, which fell by 2% against the dollar on Tuesday, fell by another 1% against the greenback in early trade on Wednesday, as questions around President Cyril Ramaphosa's Cabinet and global trade war concerns continued to caused what an analyst described as a "tornado" of risks. 

The local currency opened the day at R14.73/$ and was trading at R14.88/$ at 10:30, down 1% on the day. 

South Africans are still waiting for President Cyril Ramaphosa to announce his Cabinet, which may take place as soon as Wednesday. 

ANC deputy president David Mabuza was sworn in as an MP on Tuesday, paving the way for his possible reappointment as the country's deputy president.  

Lukman Otunuga, a research analyst at FXTM, said in a note to clients that the local currency was facing a "tornado of different risks".

"The rand does not like the headlines that David Mabuza is in the running to become deputy president," said Otunuga. 

"It is shaping up to be yet another rough, rocky and unpredictable trading week for financial markets as investors tussle with a number of different themes. Ongoing US-China trade developments, Brexit uncertainty and the return of drama over the Italian state budget are just some of the themes concerning investors," he said.  

In a morning note to clients TreasuryONE said the rand would remain on the back foot in Wednesday and could fall below the R15/$ level. The last time the rand ended a day's trade at below R15 to the greenback was in September 2018. 

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