Rand is under pressure as a result of the findings against Ramaphosa

The rand fell more than 1% to R17.38 today, after closing on a three-month high on Wednesday, as fears that President Cyril Ramaphosa would be recalled gripped markets and frightened investors.

This comes after an independent panel of experts appointed by Parliament and chaired by retired Chief Justice Sandile Ngcobo found Ramaphosa may have a prima facie case to answer for failing to report millions of rand in foreign currency stolen from his Phala Phala farm in Limpopo yesterday.

The Section 89 Independent Panel discovered preliminary evidence that Ramaphosa may have violated his oath of office and should be investigated further.

As a result, the news sent shockwaves through the local markets and put pressure on the rand, as Ramaphosa, the preferred candidate of investors, is now facing removal from the Union Buildings just weeks before the ANC’s elective conference.

The ruling African National Congress (ANC) has called an emergency National Executive Committee (NEC) meeting for tonight to discuss the report’s implications, though it will still be debated in Parliament for adoption next week.

Some NEC members are expected to ask Ramaphosa to step aside while investigations into this saga continue, while others are expected to defend him.

According to Andre Cilliers, a currency strategist at TreasuryONE, all of these recent developments are weighing on the rand after a strong 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.”

Ramaphosa acknowledged in a statement yesterday that the Section 89 process had presented an unprecedented and extraordinary moment for South Africa’s constitutional democracy.

Ramaphosa stated that the panel’s recommendations needed to be carefully read and considered in the interests of the government’s and the country’s stability.

He did, however, reiterate the statement he made in his submission to the panel and exonerated himself of any involvement in the Phala Phala crime cover-up and 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, following the release of the report, Ramphosa’s spokesperson, Vincent Magwenya, has cancelled his weekly news media briefing.

The National Council of Provinces also cancelled a question-and-answer session with Ramaphosa scheduled for today after he requested a postponement to give him time to review the report.