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Rand falls on fears of Gordhan exit, stocks rise

Currency falls 5% from Monday’s high.

JOHANNESBURG – South Africa’s rand extended losses on Tuesday after President Jacob Zuma ordered Finance Minister Pravin Gordhan to return early from an investor roadshow, sparking speculation of an imminent cabinet shake-up.

Gordhan cut short the roadshow, which had been organised to reassure investors, and flew back to South Africa on Tuesday, saying he was still the finance minister when asked about reports that he was about to be sacked.

His recall on Monday rattled investors who see him as a focus of stability, widely respected in financial markets.

But the country’s stocks rose, with gold and platinum shares feeling the benefit of a weaker rand and firm commodity prices.

The rand has weakened nearly 5% from a 20-month high of 12.3125/$ on Monday morning. It fell to a session low of 13.1150/$ on Tuesday, before regaining some ground.

At 23:55, the rand traded at 12.9917 per dollar, 1.83% weaker from its New York close on Monday.

“We have come back from our worst levels but we are only going to recover properly when we fully understand what’s going on,” George Glynos, director at ETM Analytics, said.

Government bonds weakened further, and the yield for the benchmark instrument due in 2026 rose 3 basis points to 8.74%.

On the bourse, the benchmark Top-40 index rose 1.24% to 45,215 points while the All-Share index gained 1.13% to 52,309 points.

“You have a stronger gold price and a weaker rand, and it is a welcome relief to both the gold and the platinum sector. Lonmin for example is outperforming, it is the more marginal players who benefit in this sort of market,” Investec fund manager Hanre Rossouw said.

Spot gold was down 0.17% at $1,251.70 an ounce by 23:55, having touched its highest in a month at $1,261.03 on Monday, while platinum gained 0.88% to $955.00 an ounce.

The biggest gainers included Lonmin, which rose 5.56% to R14.43, while Anglo American Platinum gained 4.68% to R306.18 and African Rainbow Minerals lifted 8.28% to R94.80. 

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