The rand has recovered some of its losses since the Ramaphosa findings last week – but political uncertainty is keeping the unit under pressure.
The South African rand clawed back some of its losses since the release of the explosive section 89 report on president Cyril Ramaphosa’s Phala Phala farm last week, but it remains in shaky space as political uncertainty persists.
According to Investec chief economist Annabel Bishop, the currency has not retreated to levels before the release of the report because concerns still centre on the president’s statement itself, along with some issues raised by the judges on the panel and the increased domestic political risk that has weakened the rand.
“In addition, the rand’s continued partial recovery today was aided by China increasingly loosening its zero-tolerance stance against Covid-19 over the past weekend, reducing some of the fears about a harsher global economic slowdown than originally feared.” “Emerging Market economies face the additional risk of an increase in risk aversion in global financial markets if the Fed’s monetary policy does prove too restrictive, which will add a weak underpin to the rand.
Ramaphosa has filed a case with the Constitutional Court to have the findings of the panel set aside, while reports from the ANC’s NEC indicate that the president has won support from the majority of the party to reject the adoption of the report in the National Assembly.
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