JOHANNESBURG (Reuters) – South Africa’s rand suffered fresh losses on Tuesday after a turbulent start to the week as markets waited to see how the new Government of National Unity (GNU) would tackle economic reforms following the formation of the cabinet.
At 1530 GMT, the rand was trading at 18.6325 against the dollar, 1.5% weaker than its previous close. The dollar was little changed against a basket of global currencies.
“With the GNU cabinet announcement in the rearview mirror, the market now awaits clear signs of intent regarding economic reforms,” ETM Analytics said in a research note.
President Cyril Ramaphosa’s African National Congress (ANC) lost its parliamentary majority for the first time in three decades in the May 29 elections 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 markets’ initial optimism waned a day after the new cabinet, which includes former opposition leader John Steenhuisen as agriculture minister, was formed.
The dollar’s recent strength also dampened the rand as markets began to turn their attention to the US presidential election in November.
“Rising momentum behind Donald Trump’s re-election campaign following President Biden’s weak debate performance last week and a Supreme Court ruling yesterday that Trump has broad immunity from prosecution were the driving force,” ETM Analytics added.
In addition to local factors, the risk-sensitive edge often also relies on global factors, such as US monetary policy and political developments.
On the Johannesburg Stock Exchange, the blue-chip Top-40 index closed 0.3% lower.
South Africa’s 2030 government bond was slightly stronger, with yields down 0.5 basis points to 9.95%.
