South Africa’s rand fell sharply against the dollar on Friday, breaching the psychologically crucial 16.00 mark for the first time in two weeks after the finance minister said an investigation into to him was aimed at damaging his credibility.
On Friday the rand had weakened 3.6% to 16.16371 per dollar in volatile trade that set the currency on track for the biggest daily loss since 2011.
The rand was by far the weakest performer in a basket of emerging market currencies measured against the greenback.
Bonds also weakened sharply as yields spiked, with the benchmark 2026 issue adding 9.5 basis points to 9.42%, its weakest in more than 3 weeks.
Finance Minister Pravin Gordhan said he would take legal action to protect himself from what he called attempts to discredit him and the integrity of the Treasury.
This is was after reports of a clash between Gordhan and the head of the state revenue agency, which reportedly led Gordhan to threaten to quit from the cabinet at the weekend.
“It’s definitely not a good thing for South African assets,” said economist at NKC African Economics Bart Stemmet.
South African stocks shrugged off the Treasury turmoil to follow global peers higher as G20 policymakers meeting in Shanghai sought to find common ground on how to reboot the global economy in the face of renewed financial risks.
The benchmark Top-40 index shot up 2.61% to 43,857.79 while the broader All-share index added 2.18% to 49,429.40.
Among gainers, petro chemicals group Sasol climbed 4.4% to R434.24 after Brent crude oil hit its highest level since early January as strong U.S. gasoline demand and supply disruptions outweighed concerns about a fundamental glut.