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Rand plummets on back of massive Cabinet reshuffle

31 March 2017 8:53 AM
Markets are punishing Jacob Zuma's move and the appointment of a Finance Minsiter with "zero knowledge of how Treasury works".

The rand is continuing its declines on the back of President Jacob Zuma's massive Cabinet reshuffle.

At 7:00am the currency was trading at R13.57 to the dollar.

The rand's movement suggests Malusi Gigaba and Sfiso Buthelezi, who are replacing Gordhan and Jonas, will face a tough task convincing investors and the market at large of their ability to steer the economy through tough times.

Gigaba and Buthelezi have “zero knowledge of how Treasury works", Economist Iraj Abedian told 702’s Xolani Gwala on Friday morning.

The rand's weakening this week is the most severe percentage drop since the currency's downward movement when Nhlanhla Nene was removed as Finance minister in December 2015.

At 6pm on Thursday, the rand was trading at R12.81 to the dollar, this was shortly before President Jacob Zuma was due to meet the other five members of the ANC’s top six.

By 10:26pm, the currency had weakened to R13.27, before dropping further to R13.35 at 11:28pm.

The rand rose to a session high of R12.82 after Reuters exclusively reported that Zuma is considering offering to step down next year, at least 12 months before his term as South African president ends.

Bonds reached their firmest since Monday, with the yield on benchmark paper due in 2026 falling 12 basis points to 8.595%.

Inflation slowed to 6.3% in February from 6.6% the previous month, while the current account deficit narrowed to near a six-year low, giving policymakers room to consider a rate cut to buoy the ailing economy.

At 8:44am the rand was trading at R13.46 to the dollar.

31 March 2017 8:53 AM