Rand continues to weaken amid uncertainly over Gordhan
- Author: Leroy Wright Mar 29, 2017,
Mar 29, 2017, 1:11
Opposition parties denounced it as "economic sabotage" created to humiliate Pravin Gordhan, the finance minister who is also a respected economist, and called for Mr Zuma to explain himself to parliament.
South Africa's rand erased its advance to become the worst performer in emerging markets after President Jacob Zuma's order to abort an worldwide roadshow served as a wake-up call to the country's political risks.
Gordhan said "yes" in response to a question on whether he was still the finance minister.
Blade Nzimande, who serves in Zuma's cabinet as Minister of Higher Education has been particularly vocal, even going as far as saying that should a reshuffle come, many cabinet members will resign.
The South African currency lost 0.5pc against the USA dollar on Tuesday and is down around 4pc since news of the recall broke.
"This is breaking down the relationship of trust between the government and social partners, especially because of all the lies we hear", Dennis George, president of the Federation of Unions of South Africa, the country's second biggest labour group, said by phone.
In December 2015, Zuma unexpectedly sacked finance minister Nhlanhla Nene and replaced him with an obscure lawmaker, triggering panic among investors and a sharp drop in the rand. The minister previously froze the bank accounts of Sahara Computers, a company that belongs to the Guptas, along with having frozen several other accounts associated with the family.
"Any suggestion Zuma is interfering with Gordhan's business dealings will be a concern for investors and could signal political instability on the horizon", political analyst Daniel Silke said.
Gordhan wants the court to declare that he doesn't have the authority to intervene in the matter. Political experts have nearly unanimously agreed that a cabinet reshuffle was incoming, it was just a matter of "when".
Jabulane Mabuza, head of Business Unity South Africa and chairman of Telkom, who was with Gordhan in London, said in a text message: "At this point only presidency can give clarity on the why".
Both Fitch and Standard & Poor's rate South Africa one notch above junk.
"I think the market is pulling back just on the fact that nothing was said about the rumours since then".
Moody's, which put South Africa on negative watch in its latest review, is due to revisit that on April 7, followed by S&P at the beginning of June.