The rand rallied to its best level against the dollar since mid-October on Tuesday morning amid early indications that Deputy President Cyril Ramaphosa’s bid to become the next ANC leader was gaining momentum.
Ramaphosa‚ who is widely perceived as a safe pair of hands to steer the economy in a right direction‚ is facing off against ANC MP Nkosazana Dlamini-Zuma and several other party candidates who are vying for the top job.
“Local politics is the main reason for the significant rally in the rand this morning as the race for ANC president enters the final stages‚” Rand Merchant Bank analyst Ilke van Zyl said in an e-mailed note.
Markets have used endorsements for Ramaphosa at branch and provincial levels to predict the likely outcome when the ANC holds its elective conference in about two weeks.
The conference is billed as a binary event‚ meaning its outcomes could either set the country on a fresh start or cause it to slide deeper into economic malaise.
Ramaphosa has been vocal and steadfast in his criticism of so-called state capture‚ which has played out in the mismanagement of the key state-owned enterprises (SOEs)‚ notably Eskom.
SOEs have for a while been a drag on the fiscus as a result of bail-outs. In the current 2017-18 financial year‚ the Treasury has committed to bailing out South African Airways to the tune of about R10bn.
At 9.27am‚ the rand was at R13.4851 to the dollar from R13.5214‚ at R16.0029 to the euro from R16.0444 and at R18.1134 to the pound from R18.2281.
The euro was at $1.1867 from $1.1866.