BUSINESS NEWS - South Africa’s rand headed for its biggest weekly slide since 2015, after the firing of Finance Minister Pravin Gordhan raised concerns about the country’s fiscal path and its investment-grade credit rating.
President Jacob Zuma is replacing Gordhan with Home Affairs Minister Malusi Gigaba, the Presidency said in a statement Friday. African National Congress lawmaker Sfiso Buthelezi will replace Gordhan’s deputy, Mcebisi Jonas.
The rand was one of the top three emerging-market currencies last year and early 2017, but politics are again casting a cloud over the nation’s assets. Gordhan had fended off a downgrade in South Africa’s rating to junk, and his commitment to curb spending and government debt had endeared him to investors.
He clashed with Zuma over the affordability of building nuclear power plants and the management of state-owned companies.
“Market reaction to the cabinet reshuffle and what looks to have been a clean sweep of the Treasury top team is going to be a significant negative,” Razia Khan, chief Africa economist at Standard Chartered Plc, said in an email.
“Given past volatility in the rand when a cabinet reshuffle was even suggested, the expectation is that the impact may be more pronounced now.”
The rand was down 2.1% at 13.567 per dollar as of 07:15 in Johannesburg, the weakest in two months. The currency was heading for a 9% loss for the week — the worst such performance since the last time Zuma rocked markets with a finance-minister firing.
Back in December 2015, it was Nhlanhla Nene’s ouster that hurt confidence — an episode that ended with Zuma bringing back the respected Gordhan to office.
