Sars Wars: How the volatile rand will play out this week | Fin24
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Sars Wars: How the volatile rand will play out this week

Aug 29 2016 07:46
Matthew le Cordeur

Cape Town – The rand could this week swing up or down depending on what happens to Finance Minister Pravin Gordhan and the Hawks investigation into an alleged illicit investigation unit at Sars.  

The rand lost R1 in the past two weeks against the dollar, with the currency trading 0.82% lower at R14.32/$ on Monday at 07:45.

Gordhan could be arrested within the next two weeks by the Hawks in a case steeped with allegations of political infighting in the ruling ANC party, according to a report in City Press on Sunday.

“If we do get rumours (regarding Gordhan) then R14.55/$ will be tested quickly,” said Umkhulu Consulting’s Adam Phillips on Monday. “If nothing is said then some stale dollar longs might cause it back to nearer R14.00/$.”

A Rand Merchant Bank survey revealed that there was a 50% probability that if Gordhan is fired as minister, the rand could decline by R3 against the dollar. That would see the rand trading at around R17/$, a low point last seen when Zuma fired former Finance minister Nhlanhla Nene in December 2015.

The rand’s decline was further impacted by a speech by US Federal Reserve chairperson Janet Yellen on Friday, who was “more bullish on the US economy than usual”, Phillips said.

“That was all operators needed to push the dollar up,” he said. A stronger dollar weakens the rand.

“Given what the dollar has done, the rand would have been nearer R13.80/$ in any case, but the move up into the R14.30s due to local news clearly has everyone nervous.”

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pravin gordhan  |  markets  |  sars wars  |  currencies  |  equities  |  rand


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