Sensitive rand yo-yos on Zuma ouster rumours

Cape Town - The rand suddenly firmed by over 10 cents to the dollar in just five minutes on Tuesday afternoon, which according to analyst Wichard Cilliers of TreasuryOne shows its heightened sensitivity to political events.

The local currency had been trading at R12.42 to the dollar at 12:40 before it suddenly fell to R12.29, a gain of 13 cents.  

“There are rumours doing the rounds that President Zuma might step down. The rumours are unsubstantiated at this point, but the rand had a sharp knee-jerk down to R12.29 following the rumour,” said Cilliers in a WhatsApp message. 

The local unit climbed back to R12.36, before again strengthening to trade at R12.32 at 13:30, up 0.5% on the day. 

“Even if the rumours turn out to be false the sudden move in the rand shows the sensitivity the rand has to any political news and this will continue to be the case going forward,” said Cilliers.

The rand started the week on a steady note, opening at R12.33/$ on Monday, slightly weaker than its previous close of R12.31/$ on Friday.

Analysts told Fin24 they expect the local currency to hold firm within the R12.25/$ to R12.50/$ range ahead of ANC birthday celebrations on Saturday, where newly elected ANC president Cyril Ramaphosa will deliver the party's annual "January 8 statement".

But news or rumours of Zuma’s ouster would cause the local currency to break this band.  

According to Bloomberg, a proposal to order Zuma to step down before his term ends in 2019 will be discussed at a Wednesday meeting of the party’s national executive committee in East London.