Johannesburg - South Africa’s rand headed for the biggest weekly drop since December against the dollar as a statement of support by President Jacob Zuma failed to ease investor concern that Finance Minister Pravin Gordhan may be replaced.
The presidency said on Thursday it wouldn’t stop an investigation by a special police unit into allegations that Gordhan oversaw the establishment of an illicit investigative unit during his tenure as head of the national tax agency, even as Zuma expressed “full confidence” in the finance minister.
Opposition parties and some independent analysts have accused Zuma, 74, of trying to gain greater control of the National Treasury to further his and his allies’ economic interests before his second and final presidential term ends in 2019. He has denied the allegation.
The rand was little changed at 14.2006 per dollar by 7.22am in Johannesburg and has declined 4.8 percent this week. It’s set for the largest weekly slump since the five days through December 11, the period when Zuma fired then-Finance Minister Nhlanhla Nene and replaced him with a little-known lawmaker. It’s the worst performer this week against the dollar among 24 emerging-market currencies tracked by Bloomberg.
“The country remains on a knife edge,” said Warrick Butler, head of emerging-market spot trading at Standard Bank in Johannesburg. “As we all know too well these days, the country’s leadership decisions can be unpredictable.”
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Gordhan was summoned to report to the Hawks police unit on Thursday. The finance minister said on Wednesday he had done nothing wrong and wouldn’t report to police.
The yield on rand-denominated bonds due in December 2026 were little changed at 9.07 percent on Friday, the highest in almost two months, and has increased 60 basis points this week for the biggest increase over such a period since Zuma fired Nene.
BLOOMBERG