Rand falls as local politics weigh

The rand fell on Monday, giving back some of the big gains it made late last week as the dollar weakened, as sentiment was hit by speculation that infighting within the ruling African National Congress would prompt cabinet changes.

At 1517 GMT the rand was 2.26% weaker at R16.95 per dollar compared to its close on Friday. It had rallied more than 2% at the end of last week.

The rally was restrained by squabbling between opposing factions of the ANC over corruption.

On Sunday, the party said President Cyril Ramaphosa will appear before its integrity commission over campaign donations. Finance Minister Tito Mboweni later wrote on his Twitter account that he was not quitting the government.

On Friday, Ramaphosa’s predecessor, Jacob Zuma, accused the president of bringing the party into disrepute over a letter he sent calling for action against ANC members accused of graft.

“The rand’s recent strengthening trend is seen to have been stymied by market concerns over the severe backlash from a number of factions in the face of the attempts by the President and his supporters to rid South Africa of corruption …and institute the reforms,” Investec economist Annabel Bishop said in a research note.

Ramaphosa said on Monday the party’s executive had decided at a weekend meeting that ANC officials formally charged with corruption and other serious crimes must step aside from their positions.

A rebound in China’s economy in August helped the Johannesburg Stock Exchange (JSE) open higher but the local political turmoil sent shares slipping to close in the red.

The FTSE/JSE all share index lost over 1 percent on the day to end at 55,481 points while the top 40 companies index fell 1.01% to close at 55,485 points.

In fixed income, the yield on the benchmark instrument due in 2030 was down 3 basis points to 9.285%.