By Madeleine van Niekerk, Business Day Live
Picture: GALLO IMAGES/FOTO24/LOANNA HOFFMAN
THE rand continued its downward trajectory against the dollar, pound and euro on Friday afternoon, reaching new record lows, as negative sentiment prevailed after President Jacob Zuma dismissed Nhlanhla Nene as finance minister on Wednesday evening.
Mr Nene has been replaced by the relatively unknown David van Rooyen.
The new minister was sworn in, there was a short briefing but little was yet known about the new minister and worse, there was no statement from the Presidency as to the reasons behind the "shock removal" and replacement of Mr Nene, Standard Bank analysts said.
"Local political involvement in the affairs of the National Treasury bode ill for the country’s future prospects, let us all hope that some sanity and corrective action happens very, very soon as the repercussions will be felt for a long, long time", the bank said.
At 3.15pm the rand was at R15.8857 against the dollar from a previous close of R15.4743. It earlier hit a weakest level of R16.0438 to the greenback.
Against the euro the rand was at R17.3992 from R16.9301 previously.
The rand was at R24.0818 against the pound from R23.4605 at Thursday’s close. The euro was at $1.0953 from a previous close of $1.0941.
Markets have expressed their discomfort and discontent with the political decision to replace the minister of finance, Nedbank Capital analysts said.
With a looming hike in US interest rates and a belief that further local downgrades were now inevitable, markets would look for opportunities to further reduce risk, the analysts said.
Next week sees the pronouncement by the Federal open market committee on US interest rates, with an increase widely expected. This is bound to strengthen the dollar and subsequent further rand weakness can be expected.
The dollar had already begun appreciating on Friday ahead of the Fed announcement next week as higher interest rates tend to make a currency more attractive to investors.