Rand weakens due to cabinet uncertainty

The South African rand weakened in early trade on Wednesday as markets awaited President Cyril Ramaphosa’s expected Cabinet announcement soon, amid uncertainty over key executive appointments.

JOHANNESBURG – The South African rand weakened in early trade on Wednesday as markets awaited President Cyril Ramaphosa’s cabinet announcement expected soon, with uncertainty over key executive appointments.

At 0639 GMT, the rand was trading at 18.31 per dollar, about 0.45% weaker than the previous close.

The ANC lost its parliamentary majority in last month’s elections for the first time since the end of apartheid three decades ago, forcing it to share power with smaller rivals.

Financial markets are waiting with bated breath for the composition of Ramaphosa’s new cabinet, after 10 political parties signed up to a government of national unity. The pro-business DA is the market favorite.

“Nominations from the Democratic Alliance could strengthen the rand, while big ANC names could have the opposite effect,” Zain Vawda, market analyst at OANDA, said on Tuesday.

Market participants will closely monitor key areas such as finance, trade, industry and competition, and small business development, Vawda said.

Officials from both the ANC and DA told Reuters a cabinet announcement could come on Wednesday or Thursday.

South Africa’s benchmark 2030 government bond was weaker in early trading, with the yield rising 2 basis points to 9.875%.

– REUTERS