‘No need to panic’ as Ramaphosa reshuffles finance portfolio
The rand held steady on Friday morning, signalling a thumps up for newly appointed finance minister Enoch Godongwana, who replaced Tito Mboweni after a sweeping cabinet reshuffle.
On Thursday night, the local currency fell as much as 2.68% against the dollar before quickly recovering as President Cyril Ramaphosa announced changes to his cabinet, ending weeks of speculation.
“From the investor point of view, it’s always concerning when we have changes in the finance portfolio given SA’s recent history. But in this case, there is an element of continuity from the policy perspective. It seems that SA will continue on the path of fiscal sustainability,” said Rowan Williams, director at Nitrogen Fund Managers.
“The rand is always a good gauge of how international investors perceive the situation and I think at this point, there is no reason to be concerned.”
Ramaphosa also took the intelligence portfolio under his wing in an unprecedented step in the democratic SA, after nearly two weeks of violence and looting in parts of Gauteng and KwaZulu-Natal.
The total cost of damage runs into R20bn, according to the preliminary estimates and had dented SA’s image to potential investors.
“There is no reason to panic, and lots of reasons to cheer. Policy continuity is likely under the new finance minister and he comes with experience and a good reputation,” said John Cairns, currency strategist at Rand Merchant Bank (RMB).
“The brief rand panic overnight was completely unjustified: memories of Nenegate live on, but this is completely different,” he said.
Nenegate refers to the firing of former finance minister Nhlanhla Nene by former president Jacob Zuma. At the time, Zuma had replaced Nene with little known Des van Rooyen, resulting in the slump in the value of the rand.
However, the rand, highly tradable because of its liquid status, was up 0.19% in early morning trade at R14.49/$. Against the euro it was up 0.21% to €17.1385 and up 0.20% to £20.1645.
Source: businesslive.co.za