The rand reversed its strong early morning gains on Monday at midday following a report that President Jacob Zuma recalled Finance Minister Pravin Gordhan and his deputy‚ Mcebisi Jonas‚ from an investor trip to the UK and US.
Gordhan lead a government‚ business and labour delegation on a post-budget road show to international investors and ratings agencies.
According to the reports‚ Zuma stated that the visit was “unauthorised.”
The rand lost 35c against the dollar in a matter of an hour after the news became known. It earlier firmed to R12.3115‚ a fresh 20-month high.
At 11.30am the rand was at R12.62.04 to the dollar from a previous close of R12.42.15. It weakened to R12.6665 in intraday trade.
The rand was at R13.6965 against the euro from R13.4748 and at R15.8547 against the pound from R15.5229.
The euro was at $1.0855 from $1.0838.
A trader said the rand weakness was directly attributable to the Gordhan news. “We will have to see how things pan out from here.”
The earlier bout of the rand strength was partly due to the weaker dollar‚ which is reeling from the expectation that the Federal Reserve will increase US rates gradually this year.
Further weakness was evident on Friday after President Donald Trump’s healthcare bill was withdrawn from congress after it became clear a necessary majority was not achievable.
The Reserve Bank’s monetary policy committee will be closely monitored this week against this backdrop. The Bank is widely expected to keep the repurchase rate on hold on Thursday‚ but is likely to revise down its inflation forecast for 2017‚ which currently hovers at about 6.4%. Tiso Black Star Group/Maarten Mittner