South African rand falls as traders await cabinet lineup
11:43 am Monday, June 24th, 2024
JOHANNESBURG (Reuters) -The South African rand slipped on Monday, as markets waited for President Cyril Ramaphosa to announce the cabinet lineup of his government of national unity.
At 1524 GMT, the rand traded at 18.16 against the dollar, more than 1% weaker than its previous close.
“Perceived friction between the GNU (government of national unity) partners is playing a role in today’s decline, although the rand was due for a technical correction in any case,” Danny Greeff, co-head of Africa at ETM Analytics, said.
The African National Congress lost its parliamentary majority for the first time in 30 years in last month’s election, forcing it to seek partners in power.
Nine other parties have joined the ANC, including the pro-business Democratic Alliance (DA), which is favoured by investors.
The ANC said on Monday that consultations with the parties were underway and that Ramaphosa would announce the new cabinet in the coming days.
“By adding more parties to the coalition, the ANC is walking a fine line between forming an inclusive government and losing investor confidence by diluting the DA’s influence,” Greeff said.
Investors want the ANC and the Democratic Alliance to play a leading role in the new government and will be watching Ramaphosa’s cabinet picks for insights into the balance of power within the coalition, he said.
Ramaphosa said in his weekly newsletter on Monday that the government’s top priority was economic growth to create jobs.
On the Johannesburg Stock Exchange, the blue-chip Top-40 index closed 0.9% stronger.
South Africa’s benchmark 2030 government bond was weaker, with the yield up 17 basis points to 9.855%.
(Reporting by Tannur Anders and Bhargav Acharya;Editing by Alison Williams, Tomasz Janowski and Andrew Heavens)
