Rand in limbo as Nhlanhla Nene’s future hangs in balance
The rand was in limbo on Tuesday morning‚ with markets unsure about the future of finance minister Nhlanhla Nene.
Nene has offered to quit over the undisclosed meetings he had with the controversial Gupta family‚ which stands accused of‚ among other things‚ wielding undue influence in the awarding of state contracts during the former president Jacob Zuma era.
Markets wobbled on Monday‚ with the rand coming within a hair’s breadth of R15/$ for the first time in three weeks‚ while government borrowing rates climbed to their highest in 10 months.
President Cyril Ramaphosa‚ who is under pressure from opposition parties to let go of Nene‚ steered clear of the matter on Monday night when he delivered the Desmond Tutu lecture.
“The news of this past weekend is now old news and we are actually not closer to any resolution‚ certainly as far as the man in the street is concerned‚” said Standard Bank trader Warrick Butler.
“No word yet from the president whether he is going to decline Nene’s offer to resign … and whilst the effect on domestic financial markets remains fairly muted‚ the longer we are left in the dark‚ [the greater] the chances of an increase in volatility.”
The uncertainty over the future of Nene cast a shadow over the rand‚ which recently bowed to pressure from a strong dollar amid the growing expectation that US Federal Reserve will continue to increase interest rates. The weaker currency has a potential to stoke inflation‚ coming at the time when international oil prices were elevated.
At 9.44am‚ the rand was at R14.8634 to the dollar from R14.8532‚ at R17.0553 to the euro from R17.0671 and at R19.4389 to the pound from R19.4461. The euro was at $1.1475 from $1.1492.
The yield on benchmark R186 bond was at 9.29%‚ from 9.285%.