South Africa’s rand weaker as local politics weigh

JOHANNESBURG (Reuters) – South Africa’s rand was slightly weaker early on Monday, giving up small gains that had enabled it to pull back from an 11-month low as political uncertainty and a bleak economic outlook continued to weigh.

At 0630 GMT, the rand was 0.2% weaker at 15.2925 per dollar compared to Friday’s close of 15.2625.

The rand plunged to 15.3100 on Wednesday, its lowest level since September 2018, with weak data, worries about the impact on the economy of heavily indebted state-owned energy firm Eskom and negative commentary from credit rating agencies piling pressure on the currency.

“The long-term objective is still the 2016 highs of 17.9000 but the more immediate target will be the 2018 highs of 15.6950, which could materialise this week,” Standard Bank’s chief trader Warrick Butler said in a note.

“Volatility has of course picked up massively over the last three weeks and the rand is now officially the worst performing currency globally since this mess started in the middle of July.”

President Cyril Ramaphosa won a court case against the anti-corruption watchdog on Thursday over a matter concerning ally and state firms minister Pravin Gordhan, ahead of a battle over findings against the president himself.

On Monday the High Court in Pretoria will hear an application by Ramaphosa for an urgent interim interdict blocking Public Protector Busisiwe Mkhwebane’s report that found wrongdoing linked to donations to his 2017 campaign for the African National Congress presidency.

Broader concerns about emerging markets and trade tensions between the United States and China have added to the rand selloff.

Confusion around a possible resolution lingered after U.S. President Donald Trump said on Friday he was not ready to make a deal with China and called a September round of trade talks into question.