South African rand extends losses on concerns over unity government obstacles
2024.07.02 03:13
JOHANNESBURG (Reuters) – The South African rand extended losses early on Tuesday on concerns over future challenges for the government of national unity (GNU) and after trading turbulently on Monday following the announcement of President Cyril Ramaphosa’s cabinet.
At 0641 GMT, the rand traded at 18.44 against the dollar, almost 0.5% weaker than its previous close. The dollar was up around 0.09% against a basket of global currencies.
“The rand is trading weaker… this morning on what seems to be a ‘buy the rumour, sell the fact’ move,” Andre Cilliers, currency strategist at TreasuryONE, said.
“The GNU remains a fragile agreement and investors are concerned over the many obstacles that need to be overcome going forward,” Cilliers added.
Ramaphosa’s African National Congress (ANC) lost its parliamentary majority for the first time in 30 years in the May 29 election and has formed a unity government with former rivals as a way to stay in power.
South African assets gave up some gains on Monday as the initial optimism shown by the markets waned a day after the new cabinet was formed. It included former opposition leader John Steenhuisen as agriculture minister.
The U.S. Federal Reserve’s Jerome Powell will speak later on Tuesday and markets will listen for hints on the future interest rate path of the world’s biggest economy.
The risk-sensitive rand often takes cues from global drivers like U.S. monetary policy in addition to local factors.
South Africa’s benchmark 2030 government bond was weaker in early deals, with the yield up 5 basis points to 10.005%.
