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More Strength for South African Rand as Zuma Quits

More Strength for South African Rand as Zuma Quits

Martin Essex, MSTA,
What's on this page

ZAR talking points:

- The South African Rand reached its highest level against the US Dollar for nearly three years Thursday.

- That follows a surprise decision by President Jacob Zuma to resign ahead of a planned Parliamentary vote of no confidence in him.

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Rand strengthens

The South African Rand extended its gains Thursday after a decision by Jacob Zuma to resign as the country’s President. In a Parliamentary vote due today, his deputy, Cyril Ramaphosa, will likely be confirmed as his successor.

The Rand has tended to strength whenever Zuma, who has been accused of corruption but consistently denied the allegations, has suffered a setback. His resignation has paved the way for a further advance in the currency, sending USDZAR to its lowest point since March 2015.

USDZAR Price Chart, Five-Minute Timeframe (February 14/15, 2018)

USDZAR price chart

Chart by IG

South African bonds and stocks also benefited from Zuma’s decision to resign ahead of a planned Parliamentary vote of no confidence in him that he would almost certainly have lost. The yield on the South African 10-year government bond fell by11 basis points to 8.285% as demand rose for the bonds.

In the Johannesburg stock market, the FTSE/JSE top 40 index was up by more than 4% to 52,550.

FTSE/JSE Top 40 Price Chart, Five-Minute Timeframe (February 14/15, 2018)

South African stock market index price chart

--- Written by Martin Essex, Analyst and Editor

Feel free to contact me via the comments section below, via email at martin.essex@ig.com or on Twitter @MartinSEssex

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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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