South African rand drops from nine-month high

PUBLISHED: Tue, 19 Dec 2017 09:59:07 GMT

South Africa’s rand was slightly weaker in early trade on Tuesday, retreating from a nine-month high notched in the previous session after Cyril Ramaphosa was elected leader of the African National Congress in a vote that will dictate the country’s direction.

As ANC leader, Ramaphosa, a 65-year-old union leader who became businessman, is likely to become the country’s next president after elections in 2019.

At 0624 GMT, the rand was 0.35 percent weaker against the dollar at 12.8150 rand, largely failing to hold to gains as investors worry about the composition of Ramaphosa leadership team.

“Markets got this one wrong – and were pricing in a Cyril slate victory,” said Geoff Blount, managing director, BayHill Capital.

Ramaphosa narrowly beat Nkosazana Dlamini-Zuma, a fierce campaigner against racial economic inequality, and will have to contend with the former cabinet minister’s allies in his leadership team.

Meanwhile, Ramaphosa has promised to fight rampant corruption and revitalise the economy, a message hailed by foreign investors.

Government bonds opened firmer, with the yield for the benchmark instrument due in 2026 down 4 basis points at 8.815 percent.

Reporting by Olivia Kumwenda-Mtambo and Tiisetso Motsoeneng; Editing by Sherry Jacob-Phillips

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