BUSINESS NEWS - Despite the rand making gains against major currencies following the decision to drop charges against Finance Minister Pravin Gordhan and the release of the state capture report, currency traders are reported to be cautious about the future of the rand.
The local currency has strengthened over the past two days.
The rand has been trading at levels seen before President Jacob Zuma sacked Finance Minister Nhlanhla Nene, but traders say they are still being cautious with regards to what happens next.
Rand Merchant Bank currency strategist John Cairns says: “I think most people in the market would think that if we’re going to have change in government it would lead to reduction in political risk. Perhaps what the markets are telling us is that we’re not there yet. We’re not at that end stage yet.”
He says it’s very difficult to predict the markets, as there are two options when considering the future.
“Economics suggests the rand should strengthen, politics suggests the rand should weaken, choose your camp.”
He says the markets have been digesting the latest news regarding the State of Capture report and many are adopting a wait-and-see approach.
