Friday 18 June 2021
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Rand posts gains after Ramaphosa announces Cabinet

Ramaphosa, speaking from the Union Buildings in Pretoria in a televised address, announced that Pravin Gordhan would stay on as minister of public enterprises. Tito Mboweni retained his position as minister of finance.
“There are no real surprises in the Cabinet,” said TreasuryONE in a snap note to clients.
The local currency opened the day at R14.73/$ and fell by 1% in early trade before making up its earlier losses into the afternoon. By 20:50, minutes before Ramaphosa started to speak, it was at its opening price. At 22:22 it was changing hands at R14.66/$, up 0.5%.
In a note to clients, however, Bianca Botes, Corporate Treasury Manager at Peregrine Treasury Solutions, said the retention of Mboweni and Gordhan will likely appease markets and result in a positive perception of Cabinet. “These key appointments should contribute to political stability while ensuring the continuance of the pro-economic growth foundation set by the president and the two ministers, in particular, over the past year.”
However, Botes added, gains could be limited, as the national executive had “disappointed” by assigning Mabuza the role of deputy president, “indicating that President Ramaphosa had to compromise to appease the Zuma faction within the ANC”.
“The rand showed little reaction to the announcement of Cabinet, with the Deputy Presidency of David Mabuza having largely been priced in after his swearing in as an MP on Tuesday,” Botes said.
Analysts have warned that while the rand may strengthen in the wake of the Cabinet announcement, uncertainty around US-China trade talks and Brexit will likely still dampen demand for emerging market currencies.
“One can expect the ZAR to gain some ground in the local trading session tomorrow; however, any gains in the unit will be capped by the global backdrop,” Botes said.
Lukman Otunuga, a research analyst at FXTM, said earlier in the day that the local currency was facing a “tornado of different risks”.
“The rand does not like the headlines that David Mabuza is in the running to become deputy president,” said Otunuga.
Gordhan, Mboweni retain positions in Ramaphosa’s Cabinet
Pravin Gordhan has been reappointed as minister of public enterprises by President Cyril Ramaphosa, while Tito Mboweni has retained his position as minister of finance.
President Cyril Ramaphosa outlined the structure of the national executive from the Union Buildings in Tshwane on Wednesday evening.
Ahead of the announcement, trade union federation Cosatu had called for  Gordhan’s department to be scrapped to reduce the number of Cabinet posts while the union said Mboweni should retire.
In Ramaphosa’s address to the nation, he announced he had reduced his Cabinet from 36 to 28 ministers, but did not merge either public enterprises or finance with other ministries. He said his appointees have a “huge responsibility” and his ministers would have to comply with performance agreements and targets.
Gordhan was first brought into Ramaphosa’s Cabinet in February 2018, shortly after former president Jacob Zuma resigned and Ramaphosa was elected president.
As minister of public enterprises he will continue to oversee power utility Eskom, freight rail and port group Transnet, South African Airways, state-owned arms manufacturer Denel, and other state-owned entities.
In his first 15 months on the job, much of Gordhan’s time was spent focusing on Eskom, as the country faced intermittent load shedding that put pressure on already struggling economic growth.
The state entity’s debt burden   has been described as a risk to public finances by ratings agencies. On Friday, the utility’s CEO resigned, citing ‘unimaginable demands’ impacting his health.
Mboweni took over from former Finance Minister Nhlanhla Nene is October last year, after Nene chose to resign  in wake of his testimony at the judicial inquiry into state capture. Mboweni has been criticised by unions for questioning if money spent on state support for state-owned enterprises could be better spent elsewhere.
“Isn’t it about time the country asks the question: ‘Do we still need these enterprises?’” Mboweni asked the National Assembly when he tabled his maiden Budget in February.

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