HALISTER1: Rand Assets Tumble After Zuma Fires Gordhan: Inside S. Africa

Rand Assets Tumble After Zuma Fires Gordhan: Inside S. Africa

(Bloomberg) -- Rand -1.3% to 13.4613/USD as of 8:59am in Johannesburg, weakest since Feb. 9, after South African President Jacob Zuma fired Finance Minister Pravin Gordhan late Thursday and replaced him with Malusi Gigaba, who has no financial or business experience.
  • ZAR heading for 5th day of losses, worst streak since Aug.; -7.6% this week, -2.4% this month
  • USD/ZAR one-month implied volatility soars 364bps to highest since Nov. 30
  • South African benchmark local bond due Dec. 2026 tumbles, yield rises 42bps to 8.93%, biggest one day gain since Aug. 24
    • Morgan Stanley recommends selling the bond, saying the yield could rise between 40bps and 50bps today
    • “The market has priced in some of the political uncertainty since Monday, but we expect more short-term weakness,” strategist Min Dai says in note to clients
    • “We turn bearish on SAGBs and add South Africa local bonds to our dislike list”
  • Yield on South Africa’s Eurobonds due April 2026 +18bps to 4.84%, heading for biggest rise since Dec. 15
    • South African 5-year CDS little changed at 191bps
  • Johannesburg Stock Exchange says it will adjust price bands in expectation of increased volatility
  • WATCH: Razia Khan, chief economist for Africa at Standard Chartered, discusses Gordhan’s firing
  • READ: Zuma Ally Malusi Gigaba Faces Rating Threat, Independence Doubts
  • READ: More Pain in Store for Rand After Worst Slump Since 2015: Chart

Alert: HALISTER1
Source: BFW (Bloomberg First Word)

People
Jacob Zuma (Republic of South Africa)
Malusi Gigaba (Republic of South Africa)
Pravin Gordhan (Republic of South Africa)
Min Dai (Morgan Stanley)
Razia Khan (Standard Chartered PLC)

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