SABC News - Rand slides near one-month low as Zuma survives no-confidence vote :Tuesday 8 August 2017

Rand slides near one-month low as Zuma survives no-confidence vote

Tuesday 8 August 2017 21:17

REUTERS

The USD/ZAR immediately jumped higher to close to 13.40 following the results of the Motion of no confidence in South Africa's President.

The USD/ZAR immediately jumped higher to close to 13.40 following the results of the Motion of no confidence in South Africa's President. (SABC)

South Africa's rand weakened nearly 1.5% on Tuesday evening after President Jacob Zuma survived a no-confidence vote by secret ballot in parliament, with markets reacting almost immediately and sending the unit near a one-month low.

At 1730 GMT the rand had weakened 1.4% to 13.4050 per dollar, having traded as firm as 13.1525 in the session as some participants bought options in the currency to bag profits should the motion fail.

US-listed shares of South African ETFs were down as much as 1%.

"The USD/ZAR immediately jumped higher to close to 13.40 and we expect it to keep grinding higher before rand stabilises," said head of emerging markets at TD Securities, Cristian Maggio.

"While Zuma's position is becoming increasingly precarious, which could be rand positive going forward, we think it may be too early to look at potential rand appreciation now," Maggio said.

Zuma survived a no-confidence motion against him in parliament on Tuesday by winning 198 votes to the opposition's 177 votes as African National Congress lawmakers rallied to his support.

"While the consensus had been that Zuma’s survival of the no-confidence motion would strengthen his hand ahead of the elective conference, the sub-200 number of 'no' votes calls this into question," said Standard Charted Africa analyst Razia Khan.

On Monday the rand gained as much as 1.5% to its firmest in a week after the parliamentary speaker allowed a secret ballot in the opposition-sponsored no-confidence vote against Zuma.

In fixed income bonds were largely unmoved, with the yield on the 2026 paper down 0.5 basis point at 8.565%.   

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