South African rand falls on fears of Gordhan exit, stocks rise
South Africa’s rand extended losses on Tuesday after President Jacob Zuma ordered Finance Minister Pravin Gordhan to return early from an investor roadshow, sparking speculation of an imminent cabinet shake-up.
Gordhan cut short the roadshow, which had been organised to reassure investors, and flew back to South Africa on Tuesday, saying he was still the finance minister when asked about reports that he was about to be sacked.
His recall on Monday rattled investors who see him as a focus of stability, widely respected in financial markets.
But the country’s stocks rose, with gold and platinum shares feeling the benefit of a weaker rand and firm commodity prices.
The rand has weakened nearly 5 percent from a 20-month high of 12.3125/$ on Monday morning. It fell to a session low of 13.1150/$ on Tuesday, before regaining some ground.
At 1525 GMT, the rand traded at 12.8875 per dollar, 1.16 percent weaker from its New York close on Monday.
“We have come back from our worst levels but we are only going to recover properly when we fully understand what’s going on,” George Glynos, director at ETM Analytics, said.
Government bonds weakened further, and the yield for the benchmark instrument due in 2026 rose 3 basis points to 8.74 percent.
On the bourse, the benchmark Top-40 index rose 1.24 percent to 45,215 points while the All-Share index gained 1.13 percent to 52,309 points.
“You have a stronger gold price and a weaker rand, and it is a welcome relief to both the gold and the platinum sector. Lonmin for example is outperforming, it is the more marginal players who benefit in this sort of market,” Investec fund manager Hanre Rossouw said.
Spot gold was up 0.13 percent at $1,255.38 an ounce by 1518 GMT, having touched its highest in a month at $1,261.03 on Monday, while platinum gained 0.88 percent to $955.00 an ounce.
The biggest gainers included Lonmin, which rose 5.56 percent to 14.43 rand, while Anglo American Platinum gained 4.68 percent to 306.18 rand and African Rainbow Minerals lifted 8.28 percent to 94.80 rand.
