The South African rand has nose-dived to a near two-week low, leaving many wondering if the ANC will cave to pressure as the DA’s threats to abandon the Government of National Unity (GNU) send shockwaves through the markets.
The rand’s sharp decline, which saw it weaken to R18.4139/$ before partially recovering to R18.3915, has sparked concerns that the country’s economic fortunes may be held hostage by political gridlock.
Many South Africans have been asking when the rand would start feeling the strain, given the DA’s history of using market pressure to manipulate situations in the country. As the rand continues its downward trajectory, speculation is rife that the ANC may be forced to concede to the DA’s demands to avoid further economic instability.
The current standoff stems from disagreements over the proposed composition of Cabinet, with the DA threatening to withdraw from the GNU if their demands are not met. This has created uncertainty in the markets, erasing earlier gains made by the rand following the election.
According to Bianca Botes, a director at Citadel Global, “The rand will remain cautious while cabinet negotiations play out…with no decision yet, we can expect the rand to take its cues from the global market.”
The outcome of these negotiations will have far-reaching implications for South Africa’s economic future, and only time will tell if the rand will recover from its current downturn.
Photography : RapidEye
