The rand touched the strongest levels since May on Tuesday as investors welcomed the re-election of President Cyril Ramaphosa.
President-elect Cyril Ramaphosa will be inaugurated on Wednesday. This will mark the seventh administration since the start of democracy in SA in 1994.
The president’s re-election comes after the ANC, DA, Patriotic Alliance, IFP and GOOD have agreed to join the government of national unity (GNU), which has 273 seats in the National Assembly, or 68%.
The ANC said in a statement on Monday that discussions with other parties were continuing “in the spirit of inclusivity”.
Business Day also understands that Ramaphosa may announce the members of his new cabinet after his inauguration, however, there are no time constraints on this.
“The rand maintained its upward trend, despite thin trading volumes on Monday due to a public holiday in SA, as investors welcomed the formation of a GNU,” said RMB head of forex execution Matete Thulare.
“The new government is expected to set a platform for accelerated infrastructure and other reforms, to get the economy back on track after years of low growth and high unemployment,” Matete said.
At 10.35am, the rand had strengthened 0.45% to R18.1659/$, 0.63% to R19.4655/€ and 0.58% to R23.0324/£. The euro was 0.21% weaker at $1.0717.
Andre Cilliers, currency strategist at TreasuryOne said markets were digesting the ANC’s loss of its majority in the government, adding that “the rand is expected to start realigning with global markets and follow international events, tracking more of the move seen in the dollar”.
At 10.40am, the JSE all share had risen 1.96% to 72,262.50 points and the top 40 2.17%.
At the same time in Europe, the FTSE 100 gained 0.4%, France’s CAC 0.23% and Germany’s DAX 0.13%.
Earlier in Asia, the Shanghai Composite added 0.48% and Japan’s Nikkei 1.0%, while Hong Kong’s Hang Seng lost 0.11%.
In the commodities market, gold lost 0.3% to $2,313.33/oz and platinum 0.23% to $973.20/oz. Brent crude was 0.43% weaker at $83.89 a barrel.
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