Rand Resurgence a Reflection of Municipal Election Outcomes

2016-08-14 09:17

The resurgence of the rand has hailed South Africa back to the top position of Africa’s biggest economy. This is owed to the outcome of the recent municipal elections, where the ANC lost major metros like Nelson Mandela Bay and Tshwane. Ten month highs against the dollar are no coincidence, but also a reflection by investors of the climate for business and long term prospects. This was a pattern I’d noticed earlier in the year when political events of similar significance took place

One glaring example was Jacob Zuma’s Constitutional Court Hearing regarding the Public Protector’s findings in Nkandla. The Rand that morning had jumped almost 60 cents upward against the dollar that Monday morning. Earlier periods of less decadence and governmental apathy – the Mbeki era – showed more favourable economic growth, guided by the former’s financial prudence and fiscal discipline. With many examples of political linked to monetary stability, it should be noted that more market conscious factions than the dominant patronage cohort, will be galvanized by these recent developments. The consolidation of patronage politics in the party does however, present a major stumbling block for momentum to swing the way of this market sensible faction.

With NEC meetings in Pretoria having been concluded, the directions taken by the party will reflect what it ultimately decides for its future. This is still important as the country’s economic and monetary outlook still depend, to an extent, on the choices taken by the party and its leadership.

Efforts to mask the stagnancy and decline in our economy have taken new forms as well. The recent decision taken by the government to produce GDP figures solely through Stats SA, rather than the previously conjoined effort by the Reserve Bank and the former, is seen by some as such a ploy. One thing is for sure though; political stability in a holistic frame is more attractive to investors and does good for the Rand’s value. The only issue now is positioning our political and economic strategies (whether importing or exporting) in a more long term and mutually cohesive way. Such hope it would seem, is slowly taking shape, as the balance of power is beginning to shift.

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