S. Africa rand jumps after state corruption report released

Added 2nd November 2016

The rand got another lift on Wednesday reaching its strongest level in over a month against the dollar after the courts ruled that the Public Protector’s report into so-called ‘state capture’ must be released.

S. Africa rand jumps after state corruption report released

The report, an investigation into the nature of the relationship between President Jacob Zuma and certain members of his cabinet and the Gupta family, was initially due to be released on 14 October, but was delayed by a court action brought by Zuma and former minister of Finance Des van Rooyen.

In his initial challenge Zuma said he had wanted to question witnesses himself and was not given sufficient time to provide answers to the questions asked by the constitutionally-mandated office tasked with investigating misconduct within government.

Zuma’s lawyer, however, told the courts on Wednesday that he had decided to withdraw his motion; the courts also dismissed with costs, van Rooyen’s application.

The ruling came on the same day that finance minister Pravin Gordhan was meant to appear in the dock to face charges of fraud. These charges, also seen as politically motivated, were however also withdrawn on Monday, an event that had also given a lift to the beleaguered currency.

Political missteps

The country has come under fire in recent months and the currency has been punished after a series of political missteps, in particular, the merry go-round of finance ministers that started off the year.

In July the country narrowly missed out on having its credit rating downgraded to junk status and is expected to report GDP growth around 0.2% for the year.

In its most recent credit opinion, released in September, Moodys, which has a Baa2 Negative rating on the country, said its current outlook: "The negative outlook recognizes the downside risks associated with political in-fighting, fragility of growth recovery and pressures on the fiscal front.

"The possibility of renewed volatility in global financial markets is another downside risk. While the government has taken important first steps towards gradual fiscal consolidation, deeper structural reforms to revive business confidence and growth are yet to take off.

The increasingly contentious political landscape and uncertainty surrounding leadership at the National Treasury reduce policy predictability and investor confidence," it added, pointing out that measures to revive businss confidence such as increasing labour market flexibility and reforming state-owned entities would be credit positive. 

The release of the Public Protector's report and the dropping of the charges against the finance minister bode well for the strength of South Africa’s institutions and are likely to go some way to mitigating some of the more recent criticisms levelled at the country by ratings agencies, however, it is equally clear that the release of the state capture report will leave a great deal more questions than answers.

And, as such, it is likely that most international investors will maintain a watching brief. 

Visitor's Comments Add your comment

Add Your Comment

We won't publish your address

About Author

Geoff Candy

Group digital editor

Geoff Candy joined Portfolio Adviser as News Editor in May 2014. He has been a financial journalist and broadcaster since 2005 and, in that time has worked in both South Africa and the Netherlands, covering everything from high street retailers and construction companies to mining and insurance.

Features

 Mike Webb on reviving Rathbones’ unit trust business post-Brexit

Mike Webb on reviving Rathbones’ unit trust business...

Mike Webb talks about his mission to revitalise Rathbones’ unit trust business and the impact of the UK’s decision to leave the European Union

Analysis

Profiles

Directories

Utmost Wealth Solutions
Utmost Wealth Solutions

ADDRESS Royalty House, Walpole Avenue, Douglas,...

Tweets

Events

IA International Portfolio Bond Forum 2017
IA International Retirement Planning Forum Dubai 2017
IA International Retirement Planning Forum Dubai 2017

Thursday 15 March,
Shangri-La Hotel, Dubai

Sponsored Content

Investment Strategy

OTHER STORIES FROM LAST WORD...