Rand Gains Strength As New ANC President Announced
International eyes were turned to South Africa as the nation’s largest political party decided on the matter of internal leadership. The race was between Mr. Cyril Ramaphosa and Mz Nkosazana Dlamini-Zuma.
For many, it was also a clarification of where the country is headed politically. Ratings agencies, in particular, have been watching the developments closely as they consider whether to throw the country’s debt/credit ratings further under the bus or not.
The Rand began to trade stronger leading up to the announcement and spiked in the minutes just before it was announced that Mr. Ramaposa had won (by not that many votes) strengthened to R12.57 to the Dollar. That’s was a significant change from the R12.96 where it had been before. Then there were the usual fluctuations and it seems to have settled, for the moment, at R12.75 to the Dollar.
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Some will say that the voting results once again tell the story of a party split between views, with Mr Ramaphosa getting 2440 out of 4708 votes vs Mz Dlamini-Zumas 2261 votes and that rating agencies will have to take this into account before releasing their ratings. Indeed the new leadership top 6 are split in half (3/ 3) between the two camps within the ANC.
Part of the calculations that will have to be made by the ratings agencies will now revolve around how the new leadership of the party decide to handle the future of the country’s current President and what they decide to do about all the allegations and revelations about state capture.
This may even lead to the delaying of any new ratings till after the February budget speech, which will have to reveal how government is going to raise more funds and cut spending enough to afford to try educate the nations unemployed youth for free and cover the income deficit.
For now, the Rand has reacted positively.