Rand weakens on Tuesday; GDP in focus

Rand weakened early on Tuesday after President Cyril Ramaphosa appointed a new electricity minister to try to solve the country’s worst power cuts on record, and added other allies to the cabinet ahead of elections next year.

At 09:30, the rand traded at R18.27 against the dollar.

ETM Analytics had forecast markets would not respond positively to the reshuffle, saying in a note “it offers no fresh strategy to deal with any of the crises South Africa is currently facing”.

Cabinet changes had been widely expected since Ramaphosa was re-elected leader of the governing African National Congress (ANC) at a party leadership contest in December, paving the way for him to run for a second term in 2024.

In a televised address to the nation, Ramaphosa said he had chosen Kgosientsho Ramokgopa for the newly created role of electricity minister and appointed the ANC’s No. 2 official, Paul Mashatile, as deputy president.

Later in the session, the focus will be on South Africa’s fourth-quarter gross domestic product figures, which are due at 0930 GMT.

Analysts polled by Reuters expect a quarter-on-quarter contraction of 0.4% and a year-on-year expansion of 2.2%, a decrease from the previous quarter’s figures.

The government’s benchmark 2030 bond was slightly weaker in early deals, with the yield up 1.5 basis points to 10.130%.