Rand slips in morning trade

The rand slipped on Thursday, although there appears to be no single factor behind the depreciation, while other emerging market currencies are softer and the dollar is slightly stronger.

Reasons for the local currency reaction has varied from the Public Protector issuing a notice that President Cyril Ramaphosa is being investigated for violating the Executive Ethics Code, to the Competition Tribunal refusing to drop the rand collusion case, according to TreasuryONE’s Andre Botha.

Ramaphosa has said he will cooperate with the investigation into whether he misled parliament over a donation for his 2017 campaign for leader of the ANC made by the head of services company Bosasa, and analysts say there is no immediate risk that he could be removed from office.

But the anti-corruption watchdog’s investigation increases political uncertainty at a time when the economy is performing poorly.

At 0710 GMT, the rand traded at 14.90 versus the dollar, 0.2% weaker than its previous close, despite retail sales data out yesterday showing an increase of 2.4% versus an expected 1.2 %.

Government bonds also fell, as the yield on the benchmark 2026 bond rose 3.5 basis points to 8.40%.

“The Bosasa scandal is the main factor driving a deterioration in risk sentiment,” said Lloyd Miller, an analyst at ETM Analytics. Nedbank CIB analysts also cited the Bosasa scandal among factors weighing on the rand.

Stocks on the Johannesburg bourse opened little changed, as the All-share index was flat in early trade.