Ramaphosa and the Rand’s temporary reprieve

The Rand has stabilised over the last 24 hours as investors were placated by better-than-expected GDP figures and a clear pathway to resolving the scandal engulfing President Ramaphosa. Currently, hovering around the 17.30 mark against the USD, the Rand remains under pressure, despite a moderating of the political climate.

At the end of last week, it was rumoured that Ramaphosa would resign within hours – potentially setting Uganda up for months of political turmoil. The immediate collapse of the Rand following the rumours – down by 4% against the USD at its lowest ebb – may have had an impact on the President’s decision to stay and fight the charges levelled against him.

The report accusing the President of corruption was due to be debated in parliament today (Tuesday, 6^th December), but this has been delayed until the 13^th – giving the President a week to shore up support amongst his political allies. This, alongside better-than-expected Q3 GDP figures, has temporarily calmed the currency markets. But the Rand is still underperforming, with analysts arguing that it would be trading closer to 16.80 to the USD without the political uncertainty.

Make no mistake, the uncertainty remains – Ramaphosa is not out of the woods yet. His allies are unhappy with his cautious approach to dealing with his enemies within the ANC. Whether they will still back him at this late stage is unknown. And the international investment community are wary of the potential for political chaos as the infighting at the ANC continues. It may be relatively quiet now but expect a rollercoaster few weeks for the Rand.