The South African rand experienced a decline late on Wednesday as anticipation grew over President Cyril Ramaphosa’s upcoming cabinet announcements.
By 5pm on Wednesday, the rand was trading at approximately R18.22 against the US dollar, marking a more than 0.1% decrease from its previous close. The currency further weakened by Thursday morning, trading at around R18.36 at 11:45am.
In comparison to other global currencies, the rand showed similar signs of weakness. It was trading at around R19.56 against the euro and R23.13 against the British pound.
This trend reflects the broader uncertainty in the South African financial markets as they await the finalization of the cabinet composition.
The financial markets, along with the general populace, are keenly awaiting President Ramaphosa’s announcement of the new cabinet. This announcement follows the formation of a government of national unity (GNU) by ten political parties.
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The cabinet appointments could be released late on Thursday evening, but there is a possibility of a delay into Friday if the African National Congress (ANC) and the other political parties fail to reach a consensus.
Zain Vawda, a market analyst at OANDA, commented to Reuters that appointments from the Democratic Alliance (DA) could potentially strengthen the rand, while familiar names from the ANC might have the opposite effect.
Vawda emphasized that investors are particularly focused on key portfolios such as finance, trade, industry, and competition.
According to the Bank of America (BoFA), the rand’s trajectory is closely tied to South African political developments. The bank’s analysts, Tatonga Rusike and Mikhail Liluashvili, have expressed a bearish outlook on the rand, predicting further weakening or a potential slump in the third quarter.
They forecast that the rand may fall to R18.40 to the dollar between July and September, but could regain strength in the fourth quarter as US interest rate cuts approach.
