Rand hits eight-month low amid uncertainty

File: At 0620 GMT, the rand traded 0.41% firmer at 15.3075 per dollar.

File: According to reports, Treasury is seeking an initial cut of 5 percent in the next year and further cuts.


JOHANNESBURG - The rand has been under pressure following contradictory statements by the ANC about the role of the Reserve Bank.

The rand was trading at its lowest in eight months against the dollar on Thursday morning as the ANC appears to be fragmented regarding the mandate of the SA Reserve Bank

At 09.40am the rand had weakened 0.4% to R14.9252/$, its lowest since October according to Iress, 0.48% to R16.7604/€ and 0.4% to R18.9236/£. The euro was up 0.1% to $1,1232.

The benchmark R186 government bond had weakened, with its yield rising 6.5 basis points to 8.49%. Bond yields move inversely to bond prices.

The rand has been under pressure following contradictory statements from the ANC about the role of the Reserve Bank.

ANC secretary-general Ace Magashule said on Tuesday that the governing party wanted to expand the mandate of the central bank and to explore quantitative easing.

Finance minister Tito Mboweni and the ANC's economic transformation head, Enoch Godongwana, have since contradicted Magashule's statement. 

WATCH: ANC heavyweights divided on Reserve Bank mandate

“The mixed messaging about the SARB shareholding and economic policy that we have been getting from the ruling party is unfortunately undermining the confidence that is needed to kick start this economy,” said Sasfin Wealth fixed-income trader Alvin Chawasema.

“The recent rand performance and bond curve steepening are immediate indicators of this anxiety, although the real damage is being done in the primary industries where capital investment is tentative.”

Poor economic data this week has also added to the rand's woes: first-quarter GDP contracted 3.2% and the IHS Markit purchasing managers' index fell to 49.3 points in May from 50.3 in April. 

Gold had gained 0.35% to $1,334.92/oz and platinum was little changed at $805.85. Brent crude was up 0.36% to $60.8 a barrel. 

Current-account balance figures for the first quarter will be released on Thursday, with analysts expecting a deficit of R149bn, according to a Bloomberg poll.