Rand weakens as SA waits for Ramaphosa's cabinet announcements
Rand weakens as SA waits for Ramaphosa's cabinet announcements
The rand weakened late on Wednesday as the country waits in anticipation of President Cyril Ramaphosa's cabinet announcements.
The rand was trading at around R18.22 against the dollar at 5pm on Wednesday, which was more than 0.1% weaker than its previous close.
The ZAR further weakened against global currencies and was trading at around R18.27 on Thursday at 8.45am against the dollar.
When compared to other global currencies, the rand was also weak and was trading at around R19.56 against the euro and R23.13 to the pound.
Cabinet appointments
Like most South Africans, the financial markets are waiting for Ramaphosa to provide the make-up of the new cabinet after 10 political parties signed up to form a government of national unity (GNU).
Ramaphosa is expected to release the cabinet appointments late on Thursday evening, but the announcement may even extend to Friday if the African National Congress (ANC) and the political parties do not come to a accepted compromise.
Markets
Zain Vawda, market analyst at OANDA told Reuters that appointments from the Democratic Alliance (DA) could strengthen the rand against global currencies, while familiar ANC names might have the opposite effect.
Vawda said that investors will keep a vigilant eye on key portfolios like finance, trade, industry, and competition.
A slump in the third quarter
The rand is in the hands of the SA political leaders at the moment, according to the Bank of America (BofA).
The bank said that it is "bearish" on the rand and predicts that the rand will likely weaken further or take a slump in the third quarter.
The BofA said that the rand will slip to R18.40 to the dollar between July and September.
The bank said that the rand could gain strength against the dollar in the fourth quarter as US interest rate cuts move closer, according to News24.
"We are bearish for now, given rising political risks related to negotiations between the DA and the ANC and the global backdrop," BofA analysts Tatonga Rusike and Mikhail Liluashvili said.
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