Rand steady in early trade

IOL pic aug4 rand vs dollar REUTERS Picture: Siphiwe Sibeko, Reuters

Johannesburg - South Africa's rand was steady against the dollar early on Tuesday after President Jacob Zuma said on Monday that Finance Minister Pravin Gordhan's position was not under threat, after media reports speculated the two had fallen out.

At 06h45 GMT, the rand traded at 15.8600 versus the dollar, not far off its Monday's New York close of 15.8800.

The currency had firmed nearly 2 percent on Monday after Zuma's statement.

“In a fragile economy where good news is scarce, talk is not cheap, it can either be costly or a jewel. Talk proved to be a jewel for the rand,” Rand Merchant Bank economist Isaah Mhlanga said.

The currency fell nearly 4 percent on Friday, its biggest daily fall since 2011, after Gordhan said there were attempts to discredit him and the integrity of the Treasury.

Gordhan said he had received a letter from the elite Hawks police unit questioning his knowledge of a suspected rogue spy unit at the revenue service (SARS). Gordhan, who headed SARS at the time, has said he has no case to answer.

A presidency statement on Monday said Gordhan's position was not under threat, calling reports to the contrary “total fabrication and mischievous sensationalism”.

The currency however remains vulnerable after the Treasury said the economy may expand just 0.9 percent in 2016, the lowest rate of growth since South Africa emerged from recession in 2009.

The rand is likely to react to the release of last year's fourth quarter gross domestic product numbers due to be released by Statistics South Africa at 09h30 GMT.

In fixed income, the yield for the benchmark instrument due in 2026 down 4.5 basis points to 9.375 percent.

Stocks were set to open lower at 07h00 GMT, with the JSE securities exchange's Top 40 futures index down 0.22 percent.

REUTERS

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