On Saturday, the South African rand breached the R17 mark against the dollar, trading around R17.87 at 10:20 am.
This marks a notable strengthening from its position at R18.23 at the close of business on Friday. The currency also showed varying strengths against other global currencies, trading at R19.51 to the euro and R23.01 to the pound by midday.
The strengthening of the rand comes as the African National Congress (ANC) and the Democratic Alliance (DA) continue their discussions over forming a Government of National Unity (GNU).
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The negotiations have been fraught with disputes over cabinet positions since President Cyril Ramaphosa’s recent inauguration. While initial delays were anticipated, the prolonged impasse has become a cause for concern.
Inkatha Freedom Party (IFP) President Velenkosini Hlabisa has expressed his concern over the stalled negotiations. Speaking from the IFP headquarters in Durban, Hlabisa emphasized the necessity for a swift resolution.
“Initially, we were not overly concerned by the delays, but the ongoing stalemate is troubling,” he noted.
Investment analyst Casey Sprake of Anchor Capital highlighted the market implications of the political uncertainty. “The recent volatility in the rand reflects the resurgence of domestic political risks, underscored by the negotiation strife between the ANC and the DA,” she explained.
Sprake added that both the financial markets and the country are keenly awaiting the announcement of the new cabinet. On a month-to-date basis, the rand has lost 1.88% against the dollar, driven by these ongoing concerns.
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