Rand strengthens as Zuma red-carded over Nkandla

The rand has firmed against the dollar after president Jacob Zuma was ordered by the Consitutional Court of South Africa, to pay back a portion of the R246 million spent on upgrades to his Nkandla homestead.

South Africa’s currency hit a near 4-month high against the dollar on Thursday as Chief Justice Mogoeng Mogoeng laid down a judgement saying that Zuma failed to respect the constitution when he ignored the instructions of the Public Protector to repay some of the money spent on his private residence.

The Constitutional Court ruled that Zuma – and the National Assembly – were in violation of the constitution, and ordered that the president pay back the money (an amount to be determined by Treasury).

As the judgement was being read out, the rand strengthened to as low as R14.74 to the dollar, before settling at R14.79 by 12h30 on Thursday.

The rebound in the rand has brought the currency in sight of the levels it was at before Zuma sent it into a spin by firing former finance minister Nhlanhla Nene on 9 December 2015.

At the time, the rand was trading at around R14.60 to the dollar. Zuma’s decision to fire Nene and replace him with the then-unknown Des van Rooyen sent the local currency to a record low of R17.99 to the dollar.

The rand’s position has also been bouyed by a dip in the US currency, after US Federal Reserve chair Janet Yellen’s dovish comments on interest rates hikes sparked an emerging markets comeback.

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Rand strengthens as Zuma red-carded over Nkandla