Rand weakens in response to Busisiwe Mkhwebane’s findings

The rand was weaker against major global currencies on Friday afternoon after public protector Busisiwe Mkhwebane found that President Cyril Ramaphosa “deliberately” misled parliament about a R500,000 donation from corruption-implicated company Bosasa.

In response to a question raised by DA leader Mmusi Maimane in parliament in 2018, Ramaphosa had said the R500,000 payment was made to his son, Andile Ramaphosa. Mkhwebane said Ramaphosa violated the executive ethics code and should have taken time to formulate a “well-informed response” to questions about the donation.

Shortly after Mkhwebane’s media conference, the rand began a slide to R13.94/$ after reaching R13.81/$ earlier in the day. 

“The markets are worried that anything that upsets a potential reform agenda is seen as growth negative. Clearly this report produces more uncertainty as it threatens someone who is perceived as bringing about growth-boosting structural reforms,” Nedbank chief economist Dennis Dykes said.

At 2.30pm the rand had weakened 0.78% to R13.9466/$, 0.29% to R15.6530/€ and 0.54% to R17.4589/£. The euro had weakened 0.48% to $1.1223.

The benchmark government 10-year bond was stronger, with its yield falling five basis points to 7.975%. Bonds yields move inversely to bond prices.

Gold was down 0.64% to $1,436.80/oz while platinum had gained 0.79% to $856.12. Brent crude added 0.22% to $62.64 a barrel.

The rand firmed on Thursday after the Reserve Bank trimmed the repo rate by 25 basis points to 6.5%, amid growing expectation that the US Federal Reserve will cut rates at the next Fed meeting at the end of July.

Markets have partially priced in a 50 basis points cut for the next meeting after New York Federal Reserve CEO John Williams said central banks should “act quickly” to avoid economic distress. The New York Fed refuted assumptions that Williams’s comments were referring to potential policy actions by the Fed, CNBC reported.

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Source: businesslive.co.za