Rand pulls back as relief rally linked to new finance chief wanes
The rand was a touch weaker on Wednesday morning‚ suggesting that markets have fully absorbed the appointment of the new finance minister.
Markets heaved a sigh of relief on Tuesday when President Cyril Ramaphosa named Tito Mboweni as the new finance chief‚ bringing to an end the uncertainty that had hung over local markets.
Mboweni replaces Nhlanhla Nene‚ who resigned amid pressure following his previously undisclosed meetings with the controversial Gupta family‚ which stands accused of using their relationship with former president Jacob Zuma to unduly win government tenders‚ among other allegations.
"Mboweni’s appointment is considered a strategic one given that he has been removed from the executive for many years‚ sheltering him from political divisiveness both within the ANC and the government‚" Rand Merchant Bank analyst Nema Ramkhelawan-Bhana said.
"Regarded as a hawk during his tenure at the [Reserve Bank]‚ Mboweni will need to apply the same level of tenacity to the task at hand."
The former central bank boss will have his work cut out for him‚ coming as the economy contracts‚ raising concern that the country may not be able to balance its books as required by ratings agencies.
His immediate task will be to reassure markets and ratings agencies that SA is committed to fiscal discipline.
The rand was marginally weaker in early trade‚ after settling 2% stronger on Tuesday when the markets cheered news of Mboweni's appointment.
At 10.20am‚ the rand was at R14.6371 to the dollar from R14.5598‚ at R16.8172 to the euro from R16.7354 and at R19.2597 to the pound from R19.1397. The euro was at $1.1489 from $1.1493.