Rand rallies to under R11.70/$ as Zuma says 'I resign'

Cape Town - The rand rallied to its highest level in more than two and half years on Wednesday evening after President Jacob Zuma finally bowed to pressure and resigned as the leader of the country.

"I have always been a disciplined member of the ANC," said Zuma, in announcing that he was stepping down with immediate effect. He did not take questions from the assembled media.  

If Zuma had not resigned, he would have faced a vote of no confidence in Parliament on Thursday. 

By 22:59 on Wednesday the rand was trading 2% firmer at R11.71/$ after earlier weakening after Zuma, in an afternoon interview with the SABC, questioned why the ANC wanted him to step down. 

By 07:00 on Thursday morning, the rand was trading at R11.72/$. 

Stepping down

Speaking from the Union Buildings in Pretoria in a 30 minute televised address that started at 22:30, Zuma confirmed he was stepping down. The rand firmed to R11.66/$ at the very moment Zuma said he was resigning. It was at R11.68 just before he started to speak.

The last time the currency traded at these levels against its US counterpart was in March 2015.

TreasuryOne dealer Wichard Cilliers on Wednesday evening said the rand may now test levels below R11.50.

“A lot of the good news on the removal of the president and the change of leadership has already been priced into the currency. We are trading almost 20% stronger against the USD since late November 2017," said Cilliers, adding that dollar weakness was also helping push the rand stronger. 

“We have seen other emerging market currencies also trade stronger today with the Brazilian real also 2.5% stronger against the greenback.  The commodity market has also put in a strong performance today with gold back above $1 350 and the equity markets all in the green. US treasury yields is also rallying and caused major USD currency weakness.”

Cilliers said “we still need to keep an eye on who will deliver the Budget Speech next week and how SA Inc is going to plug the shortfalls we are experiencing”.

“But for now our currency is on the front foot and looks set to continue on its way to R11.50 with all the factors in its favour.”

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