South Africa's rand steadies ahead of Ramaphosa cabinet announcement

JOHANNESBURG: South Africa's rand steadied on Wednesday ahead of President Cyril Ramaphosa's keenly awaited announcement of a new cabinet, recovering from a five-month low as jitters over the ministerial line-up soured sentiment for local assets.

At 1600 GMT the rand was 0.1% weaker at 14.7400 per dollar, having slipped to 14.8900 early in session, its weakest level since Jan. 3.

The rand fell more than 2% on Tuesday as Deputy President David Mabuza was sworn in as a lawmaker after being cleared by the ruling African National Congress (ANC) of bringing the party into disrepute.

It continued to drop on Wednesday as investors waited for the cabinet announcement.

The presidency said Ramaphosa would announce a new cabinet at 8:00 p.m. local time (1800 GMT), two weeks after the ANC saw its majority cut in national elections.

"Concerns over politics within the ANC are seen to have materially added to the rand's depreciation, along with the delay in appointing cabinet members," said chief economist at Investec Annabel Bishop said.

"Rising global markets risk-off sentiment is likely to have also been a key reason for the marked depreciation of the rand," Bishop said.

Ramaphosa's narrow victory in an ANC leadership election in late 2017, when he replaced scandal-plagued Jacob Zuma, is seen as continuing to constrain his ability to push through reforms as factions inside the party jostle for influence.

Ramaphosa is expected to announce a smaller cabinet, with several appointments -- notably to the finance, energy and mining ministries and the deputy presidency -- likely to be closely scrutinised.

On the bourse, stocks closed stronger with the broader All-Share index ending a week's slump, up 1.04% to 54,997 points, while the blue chips on the Top-40 index gained 1.11% to 49,003 points.

Leading the blue chips was local conglomerate Naspers , which rose 4.07% to 3190.40 rand after the company announced it was listing its internet business on the Euronext Stock Exchange in Amsterdam in July.

Banking stocks gained 2.8% to 93.24 rand, alongside financials as FirstRand climbed 3.58% to 64.00 rand, while Nedbank climbed 3.33% to 250.56 rand.

In fixed income, bonds weakened, with the yield on the benchmark paper due in 2026 adding 4 basis points to 8.485%.