Rand firms as Ramaphosa’s cabinet announcement quells uncertainty

Local currency firms for third day after president’s long-awaited cabinet announcement

Ramaphosa announced the new cabinet on Sunday, which includes members from several parties in the government of national unity. Picture: 123RF/SKORZEWIAK
Ramaphosa announced the new cabinet on Sunday, which includes members from several parties in the government of national unity. Picture: 123RF/SKORZEWIAK

The rand was firmer on Monday morning, on track for its third day of gains as investors welcomed President Cyril Ramaphosa’s long-awaited announcement of the new cabinet.

Ramaphosa announced the ministers on Sunday night, which includes members from several parties in the government of national unity (GNU). 

The local currency touched an intraday best of R17.9415 — its best level in almost two weeks — as “the announcement of the new cabinet brought an end to two weeks of uncertainty and fears of a breakdown of the GNU,” Citadel Global director Bianca Botes said. 

Ramaphosa, who had previously vowed to trim the number of executive positions, added two ministries to his cabinet and appointed 33 ministers. He said the expanded cabinet was to ensure that all members of the GNU were included and to separate portfolios to “ensure that there is sufficient focus on key issues”. 

Of particular significance for domestic markets has been the retention of Enoch Godongwana as finance minister, signalling a continuation of the prudent fiscal consolidation framework and projected trajectory outlined in the February budget and medium-term expenditure framework,” RMB analysts said.

At 9.50am, the rand had strengthened 0.69% to R18.0282/$, 0.4% to R19.4122/€ and 0.83% to R23.0047/£. The euro was 0.4% firmer at $1.0755.

RMB head of forex execution Matete Thulare said the new cabinet was  expected to hit the ground running “as they need to accelerate economic reforms to get the ailing economy back on track”.

He added that the rand could be expected to trade between R17.90 to R18.20 to the dollar in the short term.

Globally, markets were relieved after the May personal consumer expenditure (PCE) index, the US Federal Reserve’s preferred inflation gauge, was in line with expectations, easing from the previous month.

The moderating trend in core PCE inflation saw markets’ expectations remain anchored around a 25-basis point September rate cut from the Fed. This saw the dollar slip in the afternoon session on Friday, which provided a supportive underpin for other global currency majors as well as emerging-market currency pairs against the greenback,” RMB analysts said.

“The dollar faced more selling pressure in morning trade, setting the scene for further potential rand gains throughout the day.

At 10am, the JSE all share had gained 0.86% to 80,390.65 points and the top 40 had added 0.69%.

At the same time in Europe, the FTSE 100 was up 0.49%, France’s CAC had added 1.81% and Germany’s DAX advanced 0.56%.

Earlier in Asia, the Shanghai Composite added 0.92% and Japan’s Nikkei was up 0.12%, while Hong Kong’s Hang Seng was little changed.

In the commodities market, gold lost 0.11% to $2,324.98/oz and platinum 0.14% to $994/oz. Brent crude was 0.73% firmer at $85.61 a barrel.

With Thando Maeko



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