Rand rallies after Gordhan says he won't quit | Fin24
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Rand rallies after Gordhan says he won't quit

Oct 14 2016 18:09

Johannesburg - The rand rallied against the dollar on Friday after Finance Minister Pravin Gordhan described fraud charges against him as frivolous and said he intended to continue in his job.

Stocks rose, led by heavyweight Naspers - Africa's biggest listed company - which gained on news of plans to sell assets to repay debt and fund new acquisitions.

Investors have been worried that Gordhan, a market favourite, could be removed from his job over the charges, impeding efforts to revive economic growth and raising the risk of a sovereign credit rating downgrade to junk status.

The rand hit a session high of 14.0825 per dollar, up more than 1.1% from Thursday's close, after Gordhan told a Thomson Reuters conference that he would carry on with his job, including delivering a medium-term budget on October 26.

The rand traded at 14.2000 at 15:21 GMT, up 0.35%, holding its ground after Gordhan's lawyers said it would be pointless to take up an invitation from prosecutors to seek a review of charges against him.

The rand plunged nearly 4% on Tuesday, when prosecutors ordered Gordhan to appear in court on November 2 to answer charges that he cost the tax department R1.1m by approving early retirement for a deputy commissioner in 2010 and re-hiring him as a consultant.

Traders said markets would remain tense in the run-up to Gordhan's court appearance. "Political noise continues to dictate movement in local financial markets," Standard Bank trader Oliver Alwar said.

Government bonds gained alongside the rand, with the yield on the benchmark due in 2026 slipping 9.5 basis points to 8.81%.

On the bourse, the benchmark Top-40 index climbed 1.48% to 44 658 points while the All-Share index rose 1.29% to 51 146 points.

Naspers Ltd gained 4.70% to R2294.99 following news that it would sell its Polish e-commerce business Allegro for $3.25bn.

"It was just looking for a bit of a bounce, possibly a little bit overdone," said BP Bernstein trader Vasili Tirasis.

Naspers had fallen more than 4% in the previous session.

Steinhoff International rose 2.46% to R74.61 following plans to buy Australian retailer Fantastic Holdings for 361 million Australian dollars ($274m).

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