South Africa finmin says Treasury managing to remain "fiscally credible"
Aug 25 2016
Early morning on Wednesday (7:30 AM local time ) the rand was trading around R13.94 against the United States dollar. This "just highlights the political risk that we still have in South Africa for the foreseeable future, at least for as long as Zuma is around".
South African Finance Minister Pravin Gordhan has been contacted by police, a Treasury spokeswoman confirmed on Tuesday, after a media report said he had been summoned by an elite police investigation unit and may face charges.
Gordhan said in a statement that if any of the members of the so called spy unit had engaged in "unlawful activities then they did do without my knowledge or consent". I have a job to do in a hard environment and serve South Africa as best I can. "Throughout my 45 years of activism, I have worked for the advancement of the ANC, our Constitution and our democratic government", he said.
The rand extended its losses, falling 1.5 percent to 14.21 against the dollar, extending its losses to nearly 5 percent since the news about Gordhan became public late on Tuesday.
Zuma raised concern among investors in December by replacing then finance minister Nhlanhla Nene with relatively unknown lawmaker David van Rooyen.
Earlier this month, the performance of the ruling African National Congress in South Africa's local elections was its worst since the end of apartheid 22 years ago. The political uncertainty eroded recent gains after what has been a hard year for one of Africa's largest economies. "It's no surprise that yields increased and the rand fell like a stone yesterday and today". Bonds and the banking index also suffered.
Experts say reports of Gordhan's looming arrest will affect investor confidence in the country leading to capital outfall. One of the reasons for ignoring the summons, Mr. Gordhan added, was a letter sent to his attorney by the head of the Hawks in May, in which he was told that he was "not a suspect in the Hawks' investigation". He was reappointed to the position in December.
South African Finance Minister Pravin Gordhan delivers his 2016 Budget speech to parliament in Cape Town, February 24, 2016.
"Recall that after the initial sell-off back in Feb, USDZAR stabilised the next day and we expect similar price action today until further details are revealed".