31 August 2020
South Africa’s rand softened early on Monday, giving back some of its big gains from the end of last week spurred by a significantly weaker dollar, as investors awaited details of the ruling African National Congress’s (ANC) weekend meeting.
At 0650 GMT the rand was 0.14% weaker at 16.6175 per dollar compared to its close of 16.5950 on Friday.
The currency rallied more than 2% at the end of last week to its firmest in nearly a month, crossing the 17.00 threshold as investor bets that lending rates in the United States would stay low for longer suppressed demand for greenbacks.
The rand’s rally was however restrained by intensified infighting within the ruling ANC as the party headed into a weekend meeting with opposing factions lashing out at each other over corruption, leading to speculation over possible cabinet changes.
On Sunday, the party said President Cyril Ramaphosa will appear before its integrity commission over campaign donations. Finance Minister Tito Mboweni later wrote on his Twitter account that he was not quitting government.
On Friday, Ramaphosa’s predecessor, Jacob Zuma, accused the president of bringing the party into disrepute over a letter he sent to the party calling for action against party members accused of graft.
“Although Friday’s move was clearly more about the USD than it was about SA politics, it may well be the politics that help the rand extend its gains vs the USD to retest the lows around 16.4000 seen through July,” said economists at ETM Analytics.
“Should a strong reformist agenda then materialise from the latest NEC, the rand may well capitalise.”
The ANC is likely to give a public report of the weekend meeting this week.