It’s been a good few months for emerging-market currencies, and none more so the rand.
South Africa’s currency has had its best three-month run in almost 10 years as it rides a wave of optimism following deputy president Cyril Ramaphosa’s election as the leader of the ruling African National Congress. The 19% gain in the period ended January 31 is more than double that of the next-best emerging-market currency, Poland’s zloty.
South Africa’s ruling African National Congress wants a speedy transition of power following its election of a new leadership and will discuss the matter with president Jacob Zuma this week, a top party official said. The rand gained.
“We are aware there are a lot of people who want the new leader of the ANC taking power,” Paul Mashatile, the party’s treasurer-general, said Wednesday at a conference in Cape Town. “It is going to happen. It is not a matter of booting him out.”
Ramaphosa was elected leader of the ANC last month, replacing Zuma. While Zuma’s second and final term as president is due to end around mid-2019, his immersion in a succession of scandals has eroded support for the ANC and led to calls from within the party’s ranks for his early removal.
The rand surged to its strongest level since May 2015, advancing as much as 1.1% to R11.8335 per dollar. Yields on benchmark government bonds due December 2026 dropped seven basis points to 8.49%.
“The rand will continue to remain sensitive to the headlines surrounding political news,” Zaakirah Ismail, a fixed income analyst at Standard Bank Group, said by phone. “It certainly looks like there is pressure building for a plan for president Zuma’s removal.”
Mashatile said he couldn’t say whether Zuma will be removed before the February 8 state-of-the-nation address.
“There has to be a very smooth and quick transfer of power now there is a new leader,” he said. “The question is how we will handle this.”
Mashtile’s comments contrast with those of ANC Secretary-General Ace Magashule, who said no decision had been taken to remove Zuma, and those of Jessie Duarte, Magashule’s deputy, who told Johannesburg’s City Press newspaper that he would only step down next year.