Rand, markets under ‘extreme pressure’
The announcement that Nene had been fired as finance minster sent shock waves through the markets.
JOHANNESBURG - The rand and markets are under extreme pressure and the rand has battled to regain any ground this afternoon.
The local currency is trading at around R23,17 to the pound in comparison it broke through the R22 level just two days ago a massive increase.
It's now R15,30 to the dollar.
The announcement last night that Finance Minister Nhlanhla Nene had been fired sent shock waves through the markets this morning.
Earlier today, Fitch expressed concern that the expenditure ceilings may be raised saying it's watching the government very closely.
Economist Chris Hart says this is dangerous territory.
"Minister Nene was acting as the gatekeeper for huge expenditure demands that were placed on Treasury. He must not set himself up as the person to open the gates, they must remain shut because we have a spending problem." LISTEN: Bruce Whittfiled on market reaction to the sacking of Nene.
LISTEN: Bruce Whittfiled on market reaction to the sacking of Nene.
Despite a rough start this morning the Johannesburg Stock Exchange has managed to right itself.
The all share is slightly down 0.19 percent.
To look at the positives the weak rand has been a welcome boost for resources shares.
These companies earn their income in dollars so the poor exchange rate is welcome.
The resources index is up over four percent.
However the banking sector has taken a major knock as most major banks are down in double digits.
Standard and Poors revised the outlook of six financial institutions including FirstRand Bank, Nedbank, Standard, Investec and Capitec.
The agency also lowered its long-term South African national scale ratings of a number of banks.
Financials are down almost eight percent.
It remains to be seen if the new finance minister can restore confidence and fast.
ZUMA COMES UNDER CRITICISM
Meanwhile, as the rand battles to regain ground after Nene's firing as finance minister, Zuma has come under fire in a number of quarters for his decision.
The South African Chamber of Commerce and Industry says it's concerned, stating that decisions that affect confidence should be weighed up carefully.
The Johannesburg Chamber of Commerce and Industry says it's seeking an urgent meeting with the president to discuss his decision.
Opposition parties including the DA, EFF, Cope and IFP have slammed the move with a number of parties describing the decision as 'reckless'.
A number of economists polled this afternoon have questioned the new finance minister's ability to steady the economy and overall confidence.
There is general consensus that the collapse of commodity prices and public spending are two of the main challenges that will either make or break van Rooyen's career.