The last 2 days have seen South African Rand plunge 5% relative to the USDollar, back to 2 month lows, after reports that police are set to arrest Finance Minister Pravin Gordhan over alleged irregularities at the nation’s revenue service.
As Bloomberg reports,
Gordhan is aware of plans to arrest him and described them as an effort to thwart his campaign to end government corruption, Beeld newspaper reported on Monday.
President Jacob Zuma’s office on Sunday denied the minister would be arrested, rejecting a report in the Johannesburg-based Sunday Times newspaper that a special police unit investigating Gordhan has sent prosecutors the docket of its probe of his alleged involvement in a special agency set up within the national revenue service.
But it seems the market is less confident...
“We’re looking at a tough trajectory for USD-ZAR going into the second half of the year as the bearish political narrative in South Africa only coincides with chinks in the global macro armor,” said Roxana Hulea, an emerging market strategist at Societe Generale in London.
“We certainly haven’t seen the last episode of the long-drawn battle, but it should be clear to the markets that Gordhan’s continuity is not a given fact.”
“People are getting tired of the circus and investors don’t like uncertainty,” said Warrick Butler, head of emerging market spot trading at Standard Bank in Johannesburg. “The emerging market universe has been a loser again today. The rand is the poor cousin because of the politics.”
Of course, don't forget the ZARpocalypse warning...