SA’s ‘own Brexit’ forgotten as pound tumbles versus rand

It seems rand traders are more concerned about Brexit than South Africa’s own political elephant in the room: land reform. For now, anyway.

The South African currency is on track for its biggest one-day gain against the pound since December 15, touching its best level in three months, as British Prime Minister Theresa May faced mounting opposition to her Brexit deal. The rand extended gains after lawmakers in Cape Town backed constitutional changes to allow land seizure without compensation, though it pared its advance against the dollar.

The rand strengthened 2.5% to 18.24 per pound by 1:44 pm in Johannesburg, the most since December 15. It was 0.9% stronger against the dollar, at 14.26.

But focus may soon turn back to South Africa’s controversial land-reform process. The ruling African National Congress’ plan to expropriate land for redistribution to blacks was flagged as a credit risk by Moody’s Investors Service, which said in a report on Thursday that government policy predictability is becoming less certain ahead of elections in May next year.

Read: Panel supports SA land expropriation plans

“The land issue will be the ANC’s ‘Brexit moment’,” Marius Oosthuizen, a member of faculty at the Johannesburg-based Gordon Institute for Business Science, predicted in a recent opinion piece in the the Daily Maverick. “Handle it wrong, and South Africa leaves the global economy in a hard exit without any clear path to recovery.”