Rand posts gains after Ramaphosa announces Cabinet

The rand gained 0.5% against the dollar on Wednesday evening in the wake of President Cyril Ramaphosa's announcement of his new Cabinet.

Ramaphosa, speaking from the Union Buildings in Pretoria in a televised address, announced that Pravin Gordhan would stay on as minister of public enterprises. Tito Mboweni retained his position as minister of finance.

"There are no real surprises in the Cabinet," said TreasuryONE in a snap note to clients. 

The local currency opened the day at R14.73/$ and fell by 1% in early trade before making up its earlier losses into the afternoon. By 20:50, minutes before Ramaphosa started to speak, it was at its opening price. At 22:22 it was changing hands at R14.66/$, up 0.5%. 

In a note to clients, however, Bianca Botes, Corporate Treasury Manager at Peregrine Treasury Solutions, said the retention of Mboweni and Gordhan will likely appease markets and result in a positive perception of Cabinet. "These key appointments should contribute to political stability while ensuring the continuance of the pro-economic growth foundation set by the president and the two ministers, in particular, over the past year." 

However, Botes added, gains could be limited, as the national executive had "disappointed" by assigning Mabuza the role of deputy president, "indicating that President Ramaphosa had to compromise to appease the Zuma faction within the ANC". 

"The rand showed little reaction to the announcement of Cabinet, with the Deputy Presidency of David Mabuza having largely been priced in after his swearing in as an MP on Tuesday," Botes said. 

Analysts have warned that while the rand may strengthen in the wake of the Cabinet announcement, uncertainty around US-China trade talks and Brexit will likely still dampen demand for emerging market currencies. 

"One can expect the ZAR to gain some ground in the local trading session tomorrow; however, any gains in the unit will be capped by the global backdrop," Botes said.

Lukman Otunuga, a research analyst at FXTM, said earlier in the day that the local currency was facing a "tornado of different risks".

"The rand does not like the headlines that David Mabuza is in the running to become deputy president," said Otunuga. 

We live in a world where facts and fiction get blurred
In times of uncertainty you need journalism you can trust. For 14 free days, you can have access to a world of in-depth analyses, investigative journalism, top opinions and a range of features. Journalism strengthens democracy. Invest in the future today. Thereafter you will be billed R75 per month. You can cancel anytime and if you cancel within 14 days you won't be billed. 
Subscribe to News24
Show Comments ()
Rand - Dollar
Rand - Pound
Rand - Euro
Rand - Aus dollar
Rand - Yen
Brent Crude
Top 40
All Share
Resource 10
Industrial 25
Financial 15
All JSE data delayed by at least 15 minutes Iress logo
Company Snapshot
Editorial feedback and complaints

Contact the public editor with feedback for our journalists, complaints, queries or suggestions about articles on News24.

Government tenders

Find public sector tender opportunities in South Africa here.

Government tenders
This portal provides access to information on all tenders made by all public sector organisations in all spheres of government.
Browse tenders