Rand makes further gains as Zuma feels the heat over his future

President Jacob Zuma is feeling anxious about the current leadership changes and the transition to new leadership in the ANC, says new party leader Cyril Ramaphosa – but this is just a normal, understandable human reaction, he said.

The rand continued to strengthen against an ever weakening dollar in afternoon trade on Friday, making additional gains on the pound and the euro.

  • Dollar/Rand: R11.85 -0.57%
  • Pound/Rand: R16.88 -0.26%
  • Euro/Rand: R14.76 -1.91%

In an interview with the BBC at the World Economic Forum in Davos, Ramaphosa was asked about South Africa’s response to a recent move by the IMF to lower its growth forecast for the country, as well as the uncertainty surrounding Zuma’s tenure as president in light of the allegations of state capture.

Ahead of the WEF meeting this week, the IMF adjusted its projections for global growth in its latest report, revising South Africa’s expected GDP growth rate for 2018 down to just 0.9%, from 11% previously.

The IMF’s revision is based on data from before the ANC’s elective conference in December 2017, and thus does not factor in Ramaphosa’s election win. Following Ramaphosa’s victory, sentiment and confidence in South Africa has shifted significantly, as seen in the strength of the rand since the start of the year.

Following a week of strong performance, where the rand climbed to strengths last seen in 2015, the currency traded even stronger on Friday afternoon, hitting R11.84 to the dollar, with many expecting it to strengthen even more.

Economists and analysts have pegged much of the rand’s strength on sentiment around Ramaphosa and the hope that Zuma’s presidency will be cut short. If that happens, the rand could even go as strong as R10 to the dollar, some have speculated.

Speaking to the BBC, Ramaphosa said: “A new dawn is on the horizon – we’re now involved in a new era in South Africa. There’s a new leadership and this new leadership is just barely a month old in its position, and we are dealing with this (IMF) matter.”

The new ANC president said that he was well aware of that the issue of Zuma’s tenure was top of everyone’s mind, but would not be moved to say what was on the cards, beyond that he and Zuma were constantly “in discussions”.

“Constitutionally, president Zuma still has 18 months – but in these 18 months many things can happen,” Ramaphosa said. “He and I have agreed to be meeting regularly to discuss matters – in the course of this, we’re going to discuss the transition.”

When asked if Zuma was feeling anxious about the transition, Ramaphosa said he was human, and any human would be.

“Any normal human being would be concerned about all this and feeling anxious, so he is naturally feeling anxious and wants things to be handled carefully,” he said. “My key interest is about moving South Africa forward. It’s not so much about what happens to an individual.”

Ramaphosa addressed the claims of state capture, saying that it was being handled and making progress with the establishment of the judicial commission of inquiry into the matter. However, he did not beat around the bush, saying that state capture wasn’t a claim, but rather a fact.

“Everyone agrees our state was captured by corrupt elements, by people who purported to be close to the president, who have been doing really bad things and getting into many state institutions,” he said.

Read: Ramaphosa says South Africa has no cash for nuclear

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Rand makes further gains as Zuma feels the heat over his future