The rand tanked by more than 1% to R17.38 today after closing Wednesday on a three-month high as fears that President Cyril Ramaphosa could be recalled gripped the markets and spooked investors.
This comes as an independent panel of experts appointed by Parliament and chaired by retired Chief Justice Sandile Ngcobo yesterday found Ramaphosa may have a prima facie case to answer for not reporting millions of rand in foreign currency stolen at his Phala Phala farm in Limpopo.
The Section 89 Independent Panel found preliminary evidence Ramaphosa may have violated his oath of office and should face further scrutiny.
As a result, the news sent shockwaves through the local markets and put the rand under pressure as Ramaphosa, investors’ favoured candidate, is now facing possible removal from the Union Buildings just weeks before the ANC's elective conference.
The ruling ANC has called an urgent National Executive Committee (NEC) meeting for tonight to discuss the implications of the report, though it is still set to be debated for adoption by Parliament next week.
There is speculation some members of the NEC will ask Ramaphosa to step aside while investigations into this saga proceed, while other members are expected to come to his defence.
Andre Cilliers, a currency strategist at TreasuryONE, said all these recent developments were having a negative impact on the rand after a good rally yesterday.
“The political crisis has weighed heavily on the rand, which fell to nearly 17.30 after the news broke last night,” Cilliers said.
“The rand eventually closed at 17.17 last night after trading at 16.90 earlier in the day. The rand is currently at 17.09 as markets await further developments, while it is sharply weaker against the euro at 17.90, 20.73 against the pound, and R7.97 against the yen.
“This is in sharp contrast to the rand's emerging markets peers, which are trading stronger on the back of a less hawkish (US Federal Reserve chair Jerome) Powell and positive news out of China around Covid.”
In a statement yesterday, Ramaphosa acknowledged that the Section 89 process had presented an unprecedented and extraordinary moment for South Africa’s constitutional democracy.
Ramaphosa said the conclusions of the panel required careful reading and appropriate consideration in the interest of the stability of government and that of the country.
However, he reiterated the statement he made in his submission to the panel and exonerated himself of any involvement in the cover-up of the Phala Phala crime and the subsequent alleged clandestine hunting down of suspects.
“I have endeavoured, throughout my tenure as President, not only to abide by my oath but to set an example of respect for the Constitution, for its institutions, for due process and the law,” Ramaphosa said.
“I categorically deny that I have violated this oath in any way, and I similarly deny that I am guilty of any of the allegations made against me.”
Meanwhile, Ramphosa’s spokesperson Vincent Magwenya has cancelled his scheduled weekly news media briefing following the release of the report.
The National Council of Provinces also cancelled its question-and-answer session scheduled for today with Ramaphosa after he asked to defer the session to give him time to process the report.
BUSINESS REPORT