Rand stable at multi-year highs after Zuma pleads innocence

UPDATE 15:36: The rand was taking some strain late afternoon on Wednesday after the US January consumer price index came in at 0.5% from December. The consensus was for an increase to 0.3%.

Year-over-year CPI climbed to 2.1%, compared to the consensus forecast of 1.9%.

"The USDZAR is under a bit of pressure as the hike in interest rates in March for the US is now almost fully priced in," said TreasuryOne in a snap note.

By 15:44, the local unit was trading back at R11.88/$ from an intraday low of R11.79 following the ANC's call for a vote of no confidence in President Jacob Zuma. Zuma has since responded, saying the ANC's push for him to resign is "unfair". The unit was still 0.64% stronger than its overnight close in New York.

Cape Town - The rand stayed within its expected daily range on Wednesday, after President Jacob Zuma pleaded innocence and ignorance on why the ANC wants him to step down, saying he felt victimised. 

"I think it is unfair," he said in an interview with the SABC of the ANC's decision for him to step down. Zuma said this was the first time he believed a collective ANC decision to be incorrect. "I have not defied [the ANC], I have disagreed," he added. 

"If you don't agree with the decision it is not defiance."

The rand rand rallied to its strongest level since May 2015 to R11.79 to the US dollar after the ANC announced hours before Zuma spoke that it would vote on a motion of no confidence against the president on Thursday.

The currency, which had been trading at R11.80/$ before Zuma started speaking at about 14:00, weakened to R11.85 by 14:45, before strengthening to R11.83 by 15:00.

This is still 1% stronger than its overnight close of R11.96 to the dollar.  The expected daily range  was between R11.80 and R11.90. 

"I don't understand it," Zuma said in an interview with the SABC, about the demand by the ANC's national executive committee that he immediately step down. "I couldn't get why this had become such an issue."

The interview was the first time that Zuma had publicly responded to the ANC's decision for him to step down. 

Zuma said he had not been informed why he should step down. "I need to be furnished on what I have done," he said. "At the discussion in the NEC (national executive committee), no-one has ever provided the reasons."

He said there existed no ANC policy that the country's president should leave if the ANC elected a new party president. "After winning elections he [the ANC's president] gets finally elected by Parliament to become the president of the country, and then there is handover," he said. 

Zuma also claimed that he was against the decision of the ANC's national executive committee in 2008 to recall President Thabo Mbeki, alleging that he had argued at the time that forcing Mbeki to quit would set a bad precedent. 

He also denied that his situation was similar to that of Mbeki, who Zuma's camp unseated in 2008, opening the way for Zuma to become SA President the following year. 

'Colleagues and friends' 

The president argued that one reason for him to stay on was so that he could introduce SA's new leaders to colleagues from BRICS, and other African leaders. 

The president also claimed there had been an agreement with top ANC leaders that he would not resign immediately, after he presented a "package" that included his resignation at a later stage after a handover period. 

"We were agreed, we were happy," he said. But he said that leaders later informed him that they had been unable to sell this "package" to the NEC.

Earlier in the day Bianca Botes of Peregrine Treasury Solutions said she expects the rand to trade below the R12.00/$ level over the short term, on the back of a rebound in emerging market stocks and positive sentiment over Zuma's recall. 

She said one reason the rand didn't react much to Tuesday's announcement by ANC secretary general Ace Magashule that the party was recalling Zuma was because the president's removal had already been priced into the rand's level "for over a week". 

Zuma said he would be releasing a statement later in the day. 

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