Cape Town — The rand has continued to weaken ahead of President Cyril Ramaphosa’s anticipated cabinet announcements, reflecting market uncertainty amid ongoing political negotiations.
As of Wednesday at 5pm, the rand traded at around R18.22 against the dollar, down over 0.1% from its previous close. By Thursday morning, it further weakened to R18.27 against the dollar, R19.56 against the euro, and R23.13 against the pound, IOL reported.
This decline comes as the financial markets await the announcement of the new cabinet, following the formation of a Government of National Unity (GNU) by ten political parties after the ANC lost its parliamentary majority in recent elections.
Ramaphosa is expected to unveil the cabinet by late Thursday evening, though delays may push the announcement to Friday if negotiations within the GNU, particularly between the ANC and the DA, are not resolved .
The DA has been demanding significant influence within the new government, including 11 ministerial positions and the deputy presidency, alongside the autonomy to appoint their own directors-general and the demands have stalled negotiations and increased market volatility.
The Bank of America (BofA) remains bearish on the rand, predicting a further slump in the third quarter to R18.40 to the dollar, driven by political risks and the global economic environment. The bank, however, suggests that the rand might gain strength in the fourth quarter as US interest rate cuts come into play .
According to News24, the make-up of the cabinet is being closely watched by investors anticipating an acceleration of economic reforms needed to address the nation’s energy crisis, fix its collapsing ports and railways, and reduce crime and corruption.
DA spokesperson, Richard Newton, said the negotiations are ongoing and we have to wait for the president to make his decision.
“It’s an ongoing process, and unfortunately there’s all these sort of allegations of different meetings taking place. At this point, we don’t have any expectations of a finish point, he said.
Robert Hoodless, co-head of FX and macro analysis at InTouch Capital Markets Ltd, said there remains tensions over how jobs are dished out and the tensions appears to be behind the currency’s weaknesses.
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Compiled by Matthew Petersen
