Pulse.ng logo

In South Africa Rand under pressure amid political uncertainty, stocks weaken

By 1500 GMT the rand was 0.7 percent weaker at 14.2550 per dollar compared with the close of 14.1575 overnight.

  • Published:
The hand of South African Reserve Bank Governor Gill Marcus is seen holding South Africa's new rand banknotes in Pretoria play South African rand notes in a file photo. (REUTERS/Siphiwe Sibeko)

South Africa's rand weakened further to a one-month low on Thursday, weighed down by lingering uncertainty over whether the finance minister faces arrest.

By 1500 GMT the rand was 0.7 percent weaker at 14.2550 per dollar compared with the close of 14.1575 overnight.

The rand fell as much as 4 percent when it emerged on Tuesday police had summoned Finance Minister Pravin Gordhan to answer questions over the lawfulness of a spy unit in the revenue service.

The unit regained some ground in early trade, briefly touching 13.9565, before resuming its slide despite President Jacob Zuma saying he supported Gordhan, although would not be able to intervene in the investigation.

"The market, seemingly, is rating the latest political news as similar to that of February and May, the dates when the Hawks probe became public and when Minister Gordhan responded," Rand Merchant Bank currency strategist John Cairns said in a note.

On the stock market, the benchmark Top-40 index fell 0.21 percent to 46,759 points while the All-Share index weakened 0.15 percent to 53,482 points.

Africa's largest retailer Shoprite Holdings dropped 2.01 percent to 195 rand, budget retailer Mr Price fell 1.25 percent to 216 rand and South Africa-based bank Standard Bank Group weakened 1.61 percent to 139 rand.

"It's still driven by what is happening in the currency and there are still other factors internationally, we still are waiting for what's going to be said from the Fed," said Afrifocus securities portfolio manager Ferdi Heyneke.

Federal Reserve Chair Janet Yellen is due to make a speech to global central bankers on Friday. Although it is seen maintaining rates in September, expectations have risen that Yellen might indicate a clearer timeframe for the next hike after strong housing data and hawkish comments by other officials.

Further stock market losses were curbed by retailer Woolworths Holdings, which rose 1.77 percent to 87.01 rand after reporting a 8.9 percent rise in full-year profit as its food sales gained more market share despite a weak economy its home market.

On the bond market, government bonds also remained on the back foot, with the yield on the benchmark paper due in 2026 adding 4 basis points to 9.07 percent.

Do you ever witness news or have a story that should be featured on Pulse Nigeria?
Submit your stories, pictures and videos to us now via WhatsApp: +2349055172167, Social Media @pulsenigeria247: #PulseEyewitness & DM or Email: eyewitness@pulse.ng. More information here.