S.Africa’s Rand stages recovery on the return of Pravin Gordhan

South Africa’s former Finance Minister Nhlanhla Nene has a word with the reappointed Finance Minister Pravin Gordhan. Gordhan will come back in the position he had previously held for five years.

The reappointment of Pravin Gordhan as the South Africa’s Finance Minister added a positive tone to the market, with the rand staging recovery at midnight on Sunday as the rally in the dollar eased.

There's been another surprising announcement from the Presidency overnight as President Jacob Zuma says he has now decided to remove David van Rooyen from the position as finance minister and to reappoint Pravin Gordhan to take over the position once.

The move follows the the shock axing of Nhlanhla Nene last week and the broad fallout on South African markets. The announcement also sparked outrage from the South African Property Owners Association (Sapoa).

Neil Gopal CEO of Sapoa said we are deeply concerned about this latest rounds in our economy.

The rand recovered to R15.09/$ from R15.88 immediately after the news broke late on Sunday, after the unit briefly breached R16/$ in nervous trade on Friday.

Gordhan will come back in the position he had previously held for five years.

In his statement, President Zuma said that he made the change following several representations to reconsider his decision. "‎As a democratic government, we emphasise the importance of listening to the people and to respond to their views.

"‎I have appointed Mr Pravin Gordhan, the current Minister of Cooperative Governance and Traditional Affairs as the new Minister of Finance."

Nedbank CIB’s Mohammed Nalla says this latest development is going to strengthen the rand.

“I think we’ll see semblance of comfort return to the market, but I think the reputational damage has already been done.”

JSE CEO Nicky Newton-King warned on Sunday in a statement that the rand rout would hit South Africa hard.

"Continued currency depreciation will have a profound impact on fuel prices and on inflation overall, which will hurt companies, small businesses, and individuals," she cautioned.

Gordhan's appointment will also put to bed speculation that South Africa will veer off from its cost saving policy, that Treasury is easily influenced by political agendas, including that it will budge and approve a controversial renegotiation of SAA's Airbus deal.

The Airbus swap deal has largely been rumoured to be the reason for Nene's recalling despite government saying that he has been earmarked to head the Brics bank's African centre based in Johannesburg.