South Africa’s rand slipped on Thursday as investors adopted a cautious stance ahead of newly re-elected President Cyril Ramaphosa’s anticipated cabinet appointments under a unity government. At 1521 GMT, the rand was trading at 18.0625 against the dollar, marking a 0.6% decline from its previous close. The currency had experienced a sharper decline of over 1% earlier in the day.
Shaun Murison, a senior market analyst at IG, attributed the day’s depreciation to potential profit-taking in the rand, influenced by market wariness in anticipation of President Ramaphosa’s cabinet selections. “Today’s depreciation might suggest some profit taking in the rand on markets caution ahead of newly re-elected President Cyril Ramaphosa’s cabinet appointments,” Murison told Reuters.
Despite the day’s downturn, Murison highlighted the rand’s longer-term momentum, which appeared to be trending towards further gains. The local currency had recently strengthened, reaching a near 11-month high of 17.9200 against the dollar on Wednesday. This surge followed the formation of a government of national unity last week, with five political parties joining the African National Congress after it lost its absolute majority in a general election.
On Thursday, the dollar also strengthened against a basket of currencies, contributing to the rand’s weakening. Murison noted that the rand’s depreciation was partially due to these broader macroeconomic factors rather than solely local influences.
In the stock market, the Top-40 index (.JTOPI) closed 0.72% lower, reflecting investor caution. South Africa’s benchmark 2030 government bond also showed signs of weakness, with the yield rising 4 basis points to 9.785%.
As markets await further developments in South Africa’s political landscape, the rand’s performance remains closely tied to both local and global economic factors.
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