JOHANNESBURG (Reuters) – South Africa’s rand fell on Monday as markets waited for President Cyril Ramaphosa to announce his national unity government’s cabinet formation.
At 1524 GMT, the rand was trading at 18.16 against the dollar, more than 1% weaker than its previous close.
“The perceived friction between the GNU (Government of National Unity) partners is playing a role in the current downturn, although the Rand was in need of a technical correction anyway,” said Danny Greeff, co-head of Africa at ETM Analytics.
The African National Congress lost its parliamentary majority for the first time in three decades in last month’s elections, forcing it to find partners in power.
Nine other parties have joined the ANC, including the pro-business Democratic Alliance (DA), which is favored by investors.
The ANC said on Monday that consultations were taking place with the parties and that Ramaphosa would announce the new cabinet in the coming days.
“By adding more parties to the coalition, the ANC is walking a fine line between forming an inclusive government and losing investor confidence by diluting the DA’s influence,” Greeff said.
Investors want the ANC and the Democratic Alliance to play a leading role in the new government and will be watching Ramaphosa’s cabinet choices for insights into the balance of power within the coalition, he said.
Ramaphosa said in his weekly newsletter on Monday that the government’s top priority is economic growth to create jobs.
On the Johannesburg Stock Exchange, the blue chip Top-40 index closed 0.9% stronger.
South Africa’s 2030 government bond was weaker, with yields rising 17 basis points to 9.855%.
