South African rand falls, focus on cabinet announcement

19 days ago

JOHANNESBURG, June 24 (Reuters) – The South African rand slipped on Monday, as markets waited for President Cyril Ramaphosa to announce the cabinet lineup of his government of national unity.

Cabinet - Figure 1
Photo CNBCAfrica.com

At 1100 GMT, the rand traded at 18.1275 against the dollar, about 0.9% weaker than its previous close.

“Perceived friction between the GNU (government of national unity) partners is playing a role in today’s decline, although the rand was due for a technical correction in any case,” Danny Greeff, co-head of Africa at ETM Analytics, said.

The African National Congress lost its parliamentary majority in an election last month, the first time in 30 years, which forced it to seek coalition partners.

Nine other parties have joined the ANC, including the pro-business Democratic Alliance (DA), which is favoured by investors.

“By adding more parties to the coalition, the ANC is walking a fine line between forming an inclusive government and losing investor confidence by diluting the DA’s influence,” Greeff said.

Investors want the ANC and the Democratic Alliance to play a leading role in the new government and will be watching Ramaphosa’s cabinet picks for insights into the balance of power within the coalition, he said.

Ramaphosa said in his weekly newsletter on Monday that the government’s top priority was economic growth to create jobs.

On the Johannesburg Stock Exchange, the blue-chip Top-40 index traded around 1.2% stronger than its previous close.

South Africa’s benchmark 2030 government bond was weaker, with the yield up 15 basis points to 9.835%.

(Reporting by Tannur Anders; Editing by Alison Williams and Tomasz Janowski)

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