Johannesburg - The rand recovered some ground yesterday after President Jacob Zuma said he was not at war with Finance Minister Pravin Gordhan. The currency fell 4 percent on Friday.
The rand strengthened after Zuma moved to assure markets that there was no stand-off with Gordhan over an alleged clash with SA Revenue Service (Sars) commissioner Tom Moyane. The currency firmed 1 percent against the dollar, but investors remained cautious.
As of 5pm yesterday, the rand had firmed to be bid at R15.8996 against the dollar, 6.15c stronger than at the same time on Friday.
“There is a bit of consolidation after the steep sell-off on Friday. Markets are now taking a bit of a wait-and-see approach,” ETM Analytics economist Jana van Deventer said.
“They have already priced in a risk premium to the currency. The rand is trading at its weakest levels against the dollar since early February and we probably have to see some concrete news on the (Gordhan) front if the rand is to show more material reaction,” she said.
The reports sparked speculation that all was not well at the Treasury.
John Cairns, a currency strategist at Rand Merchant Bank, said the reported clash between Gordhan and Moyane had left the markets fearing that the minister would lose his job. “Who knows how long we will have to wait to get clarity. In the meantime, expect further large swings in the rand. With confidence so low, it will not take much to trigger a further run on.”
Zuma brought Gordhan back to the Treasury last year in a dramatic U-turn that gave South Africa its third finance chief in a week after a selling frenzy in the markets.
Yesterday, Zuma’s office said reports demanding that he should fire Moyane or interfere with the work of government agencies were unhelpful.
“The media has incorrectly reported, among other things, that there is a war at Sars and that the president and the minister of finance are somehow at war. This is a total fabrication and mischievous sensationalism,” the Presidency said.
Gordhan said there were attempts to discredit him and the integrity of the Treasury, sending the rand to its biggest daily loss since 2011 on Friday.
This followed reports that he had threatened to resign after receiving a letter from the Hawks police unit questioning his knowledge of a suspected rogue unit at Sars.
* Additional reporting by Reuters
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