eBusiness Weekly
The rand edged lower on Tuesday morning, as the dollar appeared to stabilise after falling to a three-year low when measured against a basket of other major currencies.
Traders were also keeping a close watch on local politics, which has been the primary driver of the local currency for weeks. Speculation is rife that President Jacob Zuma, whose tenure has been mired in controversy, may not serve out his full term.
The speculation came after the ANC elected Cyril Ramaphosa as the new party leader in December, creating what some call two centres of power. This dynamic could disrupt policy and economic progress, leaving SA in a state of policy paralysis, said Momentum Investments analysts Herman van Papendorp and Sanisha Packirisamy.
“Potential trade-offs between key policy objectives supported by two factions could compromise SA’s economic trajectory,” they said in an e-mailed note.
Policy paralysis could complicate SA’s already-tenuous fiscal position and lead to further sovereign credit rating downgrades Moody’s Investors Service is the only major ratings agency that still has the country’s credit rating at investment grade, after Fitch and S&P Global Ratings downgraded it to junk status in 2017.
Moody’s is set to the deliver its ratings review shortly after Finance Minister Malusi Gigaba delivers his budget speech in February. Analysts say the uncertainty could encourage the Reserve Bank’s monetary policy committee to leave interest rates unchanged when it concludes its three-day meeting on Thursday.
At 9am the rand was at R12.3368 to the dollar from close of R12.3089, at R15.1330 to the euro from R15.0969 and at R17.0174 to the pound from R16.9808. The euro was steady at $1.2267. – BusinessLive
