Cape Town - South Africa’s rand headed for a one-month low against the dollar, weakening for a second day on concern Finance Minister Pravin Gordhan’s job is on the line.
The currency of Africa’s biggest economy declined 0.3 percent to 14.4117 per dollar by 9.40am in Johannesburg, set for its weakest closing level since September 9. Yields on benchmark government bonds due December 2026 climbed two basis points to 8.96 percent, heading for the highest close since September 2.
The rand slumped 3.9 percent on Tuesday after Gordhan was summoned to appear in court on fraud charges he said were politically motivated. The allegations could give President Jacob Zuma a pretext to remove the finance minister, according to Rand Merchant Bank. Gordhan has been battling to stave of a credit-rating downgrade to junk by reining in spending by the government and state-owned companies.
“The political story will remain the front-page news and the major driver of the rand,” John Cairns, a currency strategist at Johannesburg-based Rand Merchant Bank, said in an emailed note. “The summons has provided an excuse for action to be taken by the president if he so wishes.”
BLOOMBERG