The rand was little changed on Thursday morning, having fallen more than 1% in the previous session as investors ponder the future of President Cyril Ramaphosa in office.
The independent panel appointed by parliament to investigate the President’s Phala Phala saga has recommended a full investigation, as they believe he may have broken anticorruption laws and violated the constitution.
“Wednesday’s breaking news story of the Phala Phala panel’s findings, that President Ramaphosa might have contravened anticorruption laws and violated the constitution, sent shockwaves through the local markets and put the rand under pressure,” Citadel Global director Bianca Botes.
At 9.46am, the rand was little changed at R17.2084/$, while it had weakened 0.32% to R17.9575/€ and 0.23% to R20.8165/£. The euro was 0.32% firmer at $1.0438.
Despite the rand paring the losses, analysts said there remained a high risk of a much bigger move in the rand today, and in the weeks ahead.
Meanwhile, Federal Reserve chair Jerome Powell's less hawkish tone on Wednesday evening and positive news out of China around Covid-19 supported global sentiment.
“The dollar traded at a three-month low, as US Fed chair Jerome Powell surprised markets by stating that US interest-rate hikes would start slowing as soon as December, bolstering risk appetite across the board,” said Botes.
Powell signalled that the Fed would slow the pace of interest-rate increases, while also stressing that borrowing costs will need to keep rising and remain restrictive for some time to beat inflation. His comments cement expectations for the Fed to raise interest rates 50 basis points when they meet on December 13-14.
China’s top official in charge of the fight against Covid-19 said the country’s efforts to combat the virus are “entering a new phase” with the “omicron variant weakening and more Chinese getting vaccinated”. Investors have taken this as a sign that China may be seeking to amend its strict strategies around its fight against Covid-19.
At 9.45am, the JSE all share had gained 1.9% to 76,253 points and the top 40 1.98%. Industrial metals had risen 3.55%, precious metals 2.89%, resources 2.71%, industrials 2.2% and financials 0.27%.
Earlier in Asia, the Shanghai Composite firmed 0.45%, Hong Kong’s Hang 1.45% and Japan’s Nikkei 0.92%.
Gold gained 0.61% to $1,777.82/oz and platinum 0.47% to $1,037.40/oz. Brent crude was unchanged at $86.49 a barrel.
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