South Africa’s rand strengthens as U.S. dollar slips, local politics eyed

South African Rand (Image Getty)

A weaker U.S. dollar helped the South African rand gain in early trade on Tuesday, after sliding in the previous session when sentiment was hit by squabbling within the ruling African National Congress (ANC) over corruption.

South African bank notes featuring images of former South African President Nelson Mandela (R) are displayed next to the American dollar notes in this photo illustration in Johannesburg, file. REUTERS/Siphiwe Sibeko

At 0635 GMT, the rand traded at 16.8300 per dollar, 0.66% firmer than its close on Monday.

“The dollar …continues to slide in the wake of the newly-announced Federal Reserve policy,” said Bianca Botes, executive director at Peregrine Treasury Solutions.

“Locally, it’s all eyes on the ANC and specifically the position of the president, as factionalism continues to drive a divide in the party.”

The rand had tumbled more than 2% on Monday following speculation that infighting within the ANC would prompt cabinet changes.

The ANC has been buffeted in recent weeks by reports of graft during the coronavirus crisis, putting President Cyril Ramaphosa under pressure as he has pledged to clean up the party’s reputation after a decade of scandals under his predecessor, Jacob Zuma.

Ramaphosa sought to stamp his authority on Monday, saying that party officials must take leave from their positions if charged with corruption and resign if convicted.

In fixed income, the yield on the benchmark instrument due in 2030 was down by 1.5 basis points to 9.270%.