Monday, December 14, 2015 9:49 am
*Pravin Gordhan who held the post before was reappointed
South Africa’s rand strengthened more than four percent in early trade on Monday, extending overnight gains after President Jacob Zuma named Pravin Gordhan as the new finance minister.
Zuma late on Sunday restored a widely respected Gordhan to the ministry in a dramatic U-turn that gave Africa’s most advanced economy its third finance minister in a week.
By 0610 GMT, the rand had strengthened 4.66 percent against the dollar to 15.1495, recouping some losses suffered last week following the sacking on Nhlanhla Nene in the ministry.
Zuma had immediately replaced Nene with a relatively unknown lawmaker, David Van Rooyen, sparking a wave of criticism and financial turmoil.
The currency fell more than 6 percent over two days last week following the removal of Nene, a civil servant veteran who was keen to rein in government spending.
Gordhan’s appointment on Sunday helped the rand recover most of its losses and set it up for its biggest daily percentage gain since 2008. Gordhan, who last held the post from 2009 to 2014, was due to address the media at 1pm local time (1100 GMT), a statement from the Treasury said.
But some analysts said events of the past few days have permanently damaged investor confidence in the leadership of the economy whose investment grade status is already at risk.
“Markets should rally back very strongly but I would not expect a total retracement with a permanent loss of trust in leadership even if we are in a better place,” said Peter Attard Montalto of Nomura in London.
The removal of Nene also led to a selling frenzy in South African banking stocks, which dropped nearly 20 percent on investor worries that the country’s credit rating would slip into “junk” status.
Zuma said the about-face decision was prompted by many calls to rethink his decision.
“On the 9th of December 2015, I announced the appointment of a new Minister of Finance, Mr David van Rooyen,” Sunday’s statement from the presidency said.
“I have received many representations to reconsider my decision. As a democratic government, we emphasise the importance of listening to the people and to respond to their views.”
South Africa’s ruling ANC party on Monday welcomed the reappointment of Pravin Gordhan as finance minister, saying it was an “explicit demonstration of a responsive and accountable government”.
The party added that Zuma was not pushed into appointing Pravin Gordhan .
“Clearly the President has listened,” party spokesman Zizi Kodwa told 702 Radio.
“Given the sensitivity of the portfolio, he needed a much more experienced leadership.”