Rand hits 3-month high as markets bet on Ramaphosa win
South Africa’s 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, one of the wealthiest black South Africans, has pledged to revive the struggling economy and stamp out corruption. Dlamini-Zuma 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 6:53 a.m. 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 Corp., 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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