Rand rises on optimism for Ramaphosa to win ANC vote

Johannesburg - The rand advanced to a three-month high against the dollar as delegates at the ruling African National Congress’ conference elect a new leader.

Traders are betting Cyril Ramaphosa will win after gaining more branch nominations than his opponent, Nkosazana Dlamini-Zuma.

Ramaphosa, the Deputy President and one of the wealthiest black South Africans, has pledged to revive the struggling economy and stamp out corruption. Dlamini-Zuma, the former chairperson of the African Union, has echoed President Jacob Zuma’s call for “radical economic transformation” to redistribute wealth to the black majority, a shift investors fear may blow out the budget deficit and spark rating downgrades.

The South African currency gained 0.1% to R13.0820 per dollar as of 06:53  in Johannesburg, the strongest level since September 12 on a closing basis, according to data compiled by Bloomberg.

Against the euro, it approached a five-month high and was at 15.3859.

“The rand is stronger on the likelihood of Cyril Ramaphosa being elected ANC head,” Stephen Innes, the Singapore-based head of trading for Asia Pacific at Oanda, said in a note. “And indeed Tokyo ‘carry traders’ will be smiling this morning.”

The election results are expected to be announced on Monday.

The rand’s overnight implied volatility against the dollar soared to 72%, suggesting traders are anticipating large price swings on the outcome of the contest, which has divided the 105-year-old ANC, weighed on South Africa’s currency and bonds and deterred foreign investment.

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