As the clock ticks for South Africa’s President Jacob Zuma, the risk premium on the country’s currency is climbing.
According to new data from Bloomberg, the one-week implied volatility for the rand versus the dollar has jumped 2.45 percentage points since Wednesday to the highest since mid-December.
This has lead to traders bracing for major rand swings, as any announcement from the country’s leadership is likely to send the volatile currency up or down.
Zuma’s fate is set to be sealed later on Monday (12 February) with the top leadership of the ruling African National Congress meeting to conclude the transition of power to deputy president Cyril Ramaphosa.
“Our people want this matter finalised,” Ramaphosa told a crowd of about 3,000 people on the Grand Parade next to the Cape Town city hall on Sunday to commemorate the 28th anniversary of Nelson Mandela’s release from prison.
“The National Executive Committee will be doing precisely that. We know you want closure on this matter.”
“As we emerge from a period of difficulty, a period of disunity and discord, this Nelson Mandela centenary year offers us what I would call a new beginning,” said Ramaphosa.
“It offers us an opportunity to restore to our national life the values and principles for which he so firmly stood.”