Negative political perceptions hurting the rand - economists
The rand has weakened against the US dollar on news that Pravin Gordhan has been summoned by the Hawks.
JOHANNEBSURG - The rand has weakened more than one percent against the US dollar after the National Treasury confirmed Finance Minister Pravin Gordhan has been summoned by the Hawks over his involvement in the controversial South African Revenue Services (Sars) unit.
It's still uncertain whether Gordhan, together with three other former (Sars) officials, will report to the Hawks tomorrow morning.
Argon Asset Management economist Thabi Leoka says the matter should have been handled differently as the rand has dipped before when the same reports emerged earlier this year.
"I think this is unfortunate because not too long ago, actually yesterday morning, if you'd ask an economist what they think of the rand, consensus would be that we expect the rand to strengthen somewhat.
"The rand yesterday was about 13,21 in the morning and then it weakened."
ETM analytics economist George Glynos says whether the perception that President Jacob Zuma is behind the action against Gordhan is true or not, investors' confidence will be affected.
"There are some very severe perceptions out there on the issue of state capture and the political influence that's been wielded by President Zuma and his factions. And unfortunately, so long as these perceptions are doing the rounds, you're going to have the rand reflecting that poor sentiment."
Meanwhile, questions are also being raised as to what the plan is regarding Gordhan's position.
The summons comes after a cabinet decision to put Zuma in charge of strategic decisions made by State-owned entities.
Nomnura analyst Peter Attard-Montalto says this could be part of a much bigger plan.
"I think they still need more pressure on Pravin Gordhan to try and control the agenda to get things signed off from National Treasury and this is all that part of the bigger puzzle."