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Rand hits 9-month high as Ramaphosa wins ANC leadership

Even before Cyril Ramaphosa was crowned the winner, expectations that he would win the race had pushed the rand to 12.5200 per dollar, its firmest level since 27 March 27.

Cyril Ramaphosa after taking to the stage as new ANC president on 18 December 2017. Picture: Ihsaan Haffejee/EWN

JOHANNESBURG - South Africa’s rand scaled nine-month highs on Monday after Deputy President Cyril Ramaphosa became the new leader of the ruling African National Congress (ANC) party, succeeding President Jacob Zuma.

Ramaphosa, a 65-year-old union leader who became a businessman and is now one of South Africa’s richest people, beat sole rival Nkosazana Dlamini-Zuma, 68.

He has vowed to fight rampant corruption and revitalise the economy, a message hailed by foreign investors.

Even before Ramaphosa was crowned the winner, expectations that he would win the race had pushed the rand to 12.5200 per dollar, its firmest level since 27 March.

The currency held onto the gains after the announcement, trading 2.6% firmer at 12.7500/dollar as of 1749 GMT.

“Markets are taking the view that rating downgrades in late February to early March, when the Moody’s review is due, may not happen, at least at that review, and there is a greater chance of political reforms as Ramaphosa does have a strong market track record,” said Manik Narain, a strategist at UBS in London.

“There are some questions as to how much further the market can go from here as it’s still likely to be a divided ANC.”

Zuma’s presidency, tainted by graft accusations that he denies, has tarnished the image of ANC and raised the prospect of splits.

The corruption allegations have dented South Africa’s business and consumer confidence, choking economic growth and pushing the country’s credit rating into “junk”.

South Africa’s sovereign dollar bonds extended gains after Ramaphosa’s win.

Domestic government bonds closed firmer before the results, with the yield for the benchmark government bond due in 2026 down 22 basis points at 8.855%.

On the bourse, the benchmark Top-40 index closed up 0.14% to 51,027 points while the All-Share index lifted 0.51% to 57,707 points.

The banking sector rose 5.21% as the market priced in a Ramaphosa win, with Standard Bank up 4.38% to R18.50, Firstrand 6.93% higher at R59.89 and Barclays Africa Group up 5.97% to R171.50.

Further gains were curbed by rand-hedged stocks, which make the bulk of their revenue outside South Africa and tend to weaken as the currency strengthens.

Mediclinic fell 4.23% to R102.87, Naspers lowered 2.11% to R3,240 and Richemont weakened 2.38% to R116.32.

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