It’s taken South Africa’s rand exactly nine months — and a new ruling-party leader — to claw back the losses it suffered after President Jacob Zuma unexpectedly fired Finance Minister Pravin Gordhan in March.
The rand gained as much as 1.8 percent on Wednesday to 12.2889, erasing its losses since Gordhan’s dismissal and the highest since July 2015. Gordhan’s dismissal sent the currency plunging 11 percent in two weeks and sparked a credit-rating downgrade to junk.
The rand has rallied more than 6 percent since Cyril Ramaphosa, who has pledged to revive the struggling economy and stamp out corruption, was elected leader of the African National Congress on Dec. 18. That set the billionaire businessman on a path to take over from Zuma as the country’s president. Investors are betting that may happen sooner than 2019, when his term expires, according to Legal & General Investment Management Ltd.
“The market is positively surprised by the increasing amount of support that Mr. Ramaphosa is rallying behind him,” Simon Quijano-Evans, an emerging-market strategist at Legal & General, said by email. “He is likely to continue doing so, increasing speculation about another no-confidence motion in the presidency in 2018.”
Members of the ANC’s newly elected executive committee will meet Zuma to advise him to step down in favor of Ramaphosa, Johannesburg’s City Press reported on Dec. 24, citing unidentified people. Ramaphosa beat Nkosazana Dlamini-Zuma, who was backed by the president, to the top ANC position in a closely contested vote.
Flows into South African stocks and bonds have soared since the vote. Foreigners bought a net 6.4 billion rand ($516 million) of debt and 13.4 billion rand of equities in the week ending Dec. 22, according to JSE Ltd. data.