The rand remained stable on Friday as the prospect of a government of national unity (GNU) took a blow after coalition talks between the African National Congress (ANC) and the Democratic Alliance (DA) seemed to have collapsed.
The rand was trading at around R18.47 against the dollar at the close of business on Thursday.
The rand was trading at around R18.41 against the dollar on Friday at 8.30am.
The ZAR was trading at around R19.71 to the Euro and R23.28 to the pound on Friday morning.
Runaway bride
The coalition agreement between the ANC and DA were on the brink of collapse, according to highly placed sources within the ANC.
These sources said that the deal was all but over, following a series of disagreements and public spats between the two parties.
As part of the GNU arrangement, the ANC and DA formed a voter base of around 60% of support, with other parties also signing a document of intent.
However, just a week after electing Ramaphosa as president, the deal has reportedly backfired due to a squabble over positions and ministries.
Outside of lobbying the DA into the GNU, the ANC has invited the DA, IFP, PA, FF+, UDM, PAC, Al-Jamah, Rise Mzansi, Good and the NFP.
Political risks can impact the rand
Casey Sprake, investment analyst at Anchor Capital told IOL Business that the recent volatility in the rand reflects the resurgence of domestic political risks, highlighted by negotiation strife between the ANC and the DA.
“Both the country and financial markets are eagerly awaiting the announcement of the Cabinet for the seventh administration under the newly formed government of national unity,” she said.
“On a month-to-date basis, the rand has lost 1.88% against the dollar, driven by ongoing concerns around the formation of the new presidential cabinet”.
She concluded that this places the rand marginally ahead of Brazil and Mexico who are currently holding the bottom spots on the Emerging Market ladder.
IOL BUSINESS