Rand recovers as review of finance minister charges permitted

October 12, 2016 4:14 PM

The rand plunged nearly 4 percent on Tuesday after Gordhan had been summoned to court to face fraud charges

A street trader counts out change for a customer in Durban, September 8, 2015.

South Africas rand recovered on Wednesday after the state prosecutor said Finance Minister Pravin Gordhan could ask for a review of a decision to charge him with fraud.

Stocks fell inline with most emerging assets as continued political uncertainty marred investor confidence.

At 1508 GMT, the rand traded at 14.2200 per dollar, one percent firmer from its New York close on Tuesday. Earlier in the day the unit had firmed more than 2 percent to 14.0025/dollar.

The rand plunged nearly 4 percent on Tuesday after the National Prosecuting Authority (NPA) said Gordhan had been summoned to court on Nov. 2 to hear fraud charges against him.

Prosecutor Shaun Abrahams said Gordhan cost the South African Revenue Service 1.1 million rand ($79,398) by approving early retirement for a deputy commissioner in 2010 and re-hiring him as a consultant.

Abrahams said on Wednesday Gordhan can apply for a review of the charges.

"The market reacted positively to this. Already yesterday there was some sceptism whether these claims will stick and we are seeing possibly the NPA backtracking on this decision to push ahead with attempts to prosecute the finance minister," ETM Analytics market analyst Jana van Deventer said.

On the bourse, the benchmark Top-40 index fell 0.76 percent to 45,048 points, while the All-Share index dropped 0.68 percent to 51,548 points.

Stocks fell amid economic and political uncertainty, despite banks reversing previous losses following the state prosecutor's confirmation that Gordhan could ask for a review.

"It's brought a lot of uncertainty which the market doesn't like," said Cratos Capital equities trader Greg Davies

Among the biggest blue-chip fallers were Impala Platinum which shed 2.45 percent to 60.48 rand, BHP Billiton Plc which dropped 2.15 percent to 214.38 rand and Intu properties plc which fell 2.13 percent to 48.66 rand.

Curbing further losses Nedbank Group Limited rose 0.96 percent to 218.70 rand, FirstRand Limited gained 0.42 percent to 45.53 rand and Standard Bank Group Limited rose 0.31 percent to 140.43 rand.

On the bond market, in fixed income the yield for the benchmark government instrument due in 2026 dipped 4 basis points to 8.89 percent.