South African rand drops on news report of discord over cabinet posts

JOHANNESBURG, June 27 (Reuters) – The South African rand fell sharply on Thursday as traders were spooked by a local media report that there was a major disagreement between the pro-business Democratic Alliance (DA) party and President Cyril Ramaphosa over cabinet posts.

At 1050 GMT, the rand traded at 18.36 against the dollar, around 1% weaker than its previous close.

Ramaphosa’s African National Congress (ANC) and the DA emerged as the two largest parties in the unity government after the ANC lost its parliamentary majority in an election last month.

The DA is expected to get cabinet positions in return for supporting Ramaphosa’s re-election as president.

News website News24 reported that Ramaphosa had backtracked on an offer to give the DA the minister of trade, industry and competition position, replacing it with tourism minister, although the overall number of ministerial positions offered remained the same at six.

News24 said the DA’s leadership had decided to tell Ramaphosa that if he does not stick to a prior agreement struck earlier in the week then “the deal is off” between the two parties.

Financial markets are on edge over the composition of the cabinet, as it will give an indication of whether the ANC intends to meaningfully share power with parties including the DA.

“As the cabinet announcement delay continues and rumours circulate, the rand is likely to experience further selling pressure,” said Zain Vawda, market analyst at OANDA.

The Johannesburg Stock Exchange’s Top-40 index was last down around 0.5%. The benchmark 2030 government bond was weaker, as the yield rose 15 basis points to 9.975%.

(Reporting by Tannur Anders; Editing by Alexander Winning and Anil D’Silva)