Cyril’s backers crack the Rand’s multi-month slump

With the two-horse ANC presidential race beginning to lean in favour of Cyril Ramaphosa, the market is starting to price in his victory and the Rand is firming up.

This was compounded with the news that South Africa managed to dodge a bullet when Moody’s decided to postpone our credit rating downgrade until the political fog clouding the presidential race had lifted. All this buoyed the Rand in last week’s trading.

The local currency has struggled ever since Malusi Gigaba released news of the poor state of our economy in his budget speech. So this is the first time we have seen some major pull-back from the Rand against the major currencies.

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News that the government plans to reduce the fiscal deficit by implementing country-wide expenditure cuts and higher taxes has also helped to lift the Rand. The Rand has strengthened more than 5% from levels it sank to on 16 November after S&P Global Ratings downgraded South Africa’s credit rating.

The focus is firmly on the African National Congress elective conference taking place in just less than two weeks. IT is unlikely that any other of the data sets being released this week will have as profound an effect on the Rand’s movements as any potential political banana skins.

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