Rand Plummets with Reshuffle Rumours as Gordhan Returns to SA on Zuma’s Orders

After recently strengthening and becoming the second best performing currency in the emerging markets, the Rand plummeted today to become the worst performer.

This shocking drop follows the Presidency’s confirmation earlier on Monday that President Zuma has recalled Finance Minister Pravin Gordhan and his Deputy, Mcebisi Jonas, to cancel their UK and US investment trip to return immediately to South Africa. Jonas had not yet left. He was scheduled to leave tonight to join Gordhan on the US leg of the trip.

The Treasury has confirmed that Gordhan, who was already in London to start business meetings with investors and ratings companies in the UK today, is returning to South Africa on a flight tonight, on the instruction of the President. He – and the National Treasury’s Director General, Lungisa Fuzile, who was with him in London – are due to arrive Tuesday morning at OR Tambo International Airport.

Naledi Pandor confirmed to local press on Monday that she had been appointed as acting Finance Minister by President Zuma while Gordhan was away. Zuma had given written permission for the trip, but has rescinded approval.

Rumours in South Africa vary from theories that Zuma is merely flexing his political muscle to humiliate and show Gordhan who is boss, that Zuma has been instructed by the Gupta Family to force Gordhan back to appear at a court hearing this week, and/or that Zuma is planning a cabinet reshuffle. According to unconfirmed reports on Bloomberg, other South African ministers who were currently travelling abroad have also been instructed to return immediately.

SAfm News reports that President Zuma has joined court proceedings in the court case between Gordhan and Gupta-owned Oakbay Investments. Zuma has allegedly applied to intervene in the Gupta case, saying that Standard Bank is ‘abusing court process’ and attempting to have their application struck from the roll.

The Rand had started Monday morning at R12.31 against the dollar… and plummeted more than 4% after the news to R12.8295. By late afternoon, it had improved slightly to R12.7501. This evening – at 21h15, £1 bought R16.11 and $1 bought R12.82.

Finance experts say the Rand will not necessarily weaken further if Gordhan is replaced, as long as whoever is Finance Minister maintains the same policies.