Cape Town – Markets and investors are taking a “wait and see” attitude to the fate of President Jacob Zuma, according to analysts, while his removal has already been priced into the rate of the rand for over a week.
The rand was trading at an intraweek high of R11.83/$ on Wednesday morning by 11:15, up almost 1% on the day. The local currency has been trading at under R12.00 to the US currency since early Monday morning.
Wichard Cilliers, a currency dealer at TreasuryONE, told Fin24 on Wednesday morning that investors were waiting to see what would happen to Zuma.
“Everyone will wait to see if the recalled president Zuma is going to address the nation. And then will he resign or still keep fighting to keep his power position,” he said.
According to initial reports on Tuesday evening, Zuma was set to address South Africans at 10:00 on Wednesday.
While Finance Minister Malusi Gigaba appeared to confirm the time of the address in an interview with CNN on Tuesday evening, the presidency on Wednesday denied it had said it would take place.
“The media is urged to await official notification,” it said in a statement.
“We expect the ZAR to test the R11.80/$ level if the president does resign, but the longer the saga drags on the more difficult it will become for the ZAR to gain ground,” said Cilliers.
Cilliers said reports that priority crime investigation unit the Hawks had carried out raids connected to the controversial Gupta family “continues to send out the signal that SA Inc is on the right path to really fight corruption”.
As News24 reported earlier on Wednesday, the Hawks have arrested three people, reportedly including one of the Gupta brothers, in raids carried out on Wednesday morning.
Political analyst Daniel Silke said the raids indicated that “the long arm of the law has been released to act”.
“Whilst it may well be co-incidental that the swoop on the Gupta’s compound – and even possible arrest of a Gupta brother occurs on a day in which President Zuma is slated to step down, these actions will heap further pressure on the president,” he said.
“They further erode the house-of-cards that has formed around the nexus between the President, senior leaders of the ANC and the Guptas.”
Zexit already priced in
Bianca Botes of Peregrine Treasury Solutions said she expected the rand to trade below the R12.00/$ level over the short term, on the back of rebound in emerging markets stocks and positive sentiment over Zuma’s recall.
She said one reason the rand didn’t react much to Tuesday’s announcement by ANC secretary general Ace Magashule that the party was recalling Zuma, was that the president’s removal had already been priced into the rand’s level “for over a week”.