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News Room

How Politics Has Hurt the Rand in 2016

Compare Guru
2016-10-12
The South African Rand has had its fair share of ups and downs between 2015 and 2016. Here is a timeline of the associated political events.
It is clear the Rand has taken its fair share of beatings since early December last year. With the constant yo-yo or what some economist refer to as the "W" effect, many South Africans wake up to news every day, preparing themselves for a monstrous fall in the rand, usually at the hands of SA politics.

Rand vs. Dollar Timeline

So how has the Rand performed in 2016? Here is a timeline of the Rand/Dollar exchange since the fateful Nenegate debacle. rand

9 December 2015 - Nenegate - R14.89

President Jacob Zuma decides to remove Nhlanhla Nene from his role as Minister of Finance and replaces him with David Van Rooyen. Van Rooyen was a complete unknown who previously held the role of Whip on the Standing Committee on Finance and of the Economic Transformation Cluster of the National Assembly.

10 December 2015 - Van Rooyen Inauguration - R15.41

David Van Rooyen is inaugurated as the new Minister of Finance. Zuma leaves directly after and takes no questions. Markets react badly to Zuma's decision and the Rand drops by 52 cents in value against the Dollar.

13 December 2015 - Gordhan Returns - R15.88

Former Finance Minister, Pravin Gordhan returns following a high-level political meeting. Van Rooyen is quickly ushered into another role (Minister of Cooperative Governance and Traditional Affairs) that same day. Rand hovers around R15.88 for the next three months before dropping by almost 100 cents at the end of March to R14.71 to the Dollar.

15 May 2016 - Gordhan Hawks Probe - R15.47

Rumours start to circulate that the Hawks are preparing to arrest Gordhan surrounding fraud. This is after he signed off on an early retirement package for Ivan Pillay amounting to R1.1 million. Pillay was later rehired as a consultant. By the end of May the Rand is trading at R15.70 but drops sharply by 99 cents by the end of June to R14.74 to the Dollar.

22 August 2016 - Hawks Request Meeting - R14.72

Hawks request meeting with Pravin Gordhan and SARS officials at Hawks headquarters. Gordhan refuses and says they have no warrant to do so. Rand trades at R13.57 on this day but increases to R14.72 by the end of the month.

11 October 2016 - Gordhan is Summoned - R14.25

Before Abraham's announcement Rand is trading at R13.92. After Abraham's announcement Rand is trading at R14.25 - just twenty minutes later.

12 October 2016 - Gordhan's Statement - R14.15

Gordhan releases a statement where he asks, "Who are the Hawks really serving?".

Responses To The Recent Gordhan News

Economists and citizens alike have been abuzz with the news and believe this to be the NPA's final attack on Gordhan in order to oust him from parliament.  Alec Hogg released an article on Fin24 that shows normal procedure for an early retirement case, see below: rand

Image originally appeared on Fin24

Economist Dawie Roodt has said, "We have a corrupt president who is trying to stay out of jail by getting rid of Ministers who do not support him, like Finance Minister Pravin Gordhan".
Roodt predicts many other heads of Ministers, who do not agree with Zuma, will roll in the future. Peter Attard Montalto, a Research Analyst at Nomura, says Zuma's vendetta against Gordhan is finally playing out as predicted. According to Montalto, if he is successful, Zuma and his allies will fully capture the National Treasury.
“The issue here is about access to the National Treasury and the ability of factions within the ANC to control it and use its powers to win the elective conference in December 2017,” he said.
Economist Mike Schussler called the decision to charge Gordhan a “sad day for honest people”.  
Just because the Rand is increasing doesn't mean your car insurance premiums have to. CLICK BELOW to receive a variety of comparable quotes. unnamed-7
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