Rand, government bonds weaker on Gordhan uncertainty

 South Africa's currency and bonds weakened again on Wednesday as expectations rise that President Jacob Zuma will sack finance minister Pravin Gordhan following the funeral of anti-apartheid icon Ahmed Kathrada.

The rand fell by 0.9 per cent against the dollar. Local assets have been under pressure since Zuma ordered Gordhan on Monday to abandon an investor roadshow abroad and fly home, triggering speculation about his future. Zuma has not given a reason for the recall. 

"Speculation is that the duo may be fired tomorrow evening, after Uncle Kathy's funeral," Zuma's one-time protege Julius Malema said on his Twitter feed, referring to Gordhan and deputy finance minister Mcebisi Jonas.

Malema, the firebrand leader of the Economic Freedom Fighters (EFF) party, is also a former leader of the Youth League of Zuma's ruling African National Congress (ANC).

Gordhan is seen as an emblem of stability by many investors and his comment on returning to South Africa on Tuesday that he was still the finance minister helped trim the rand's losses.

Gordhan said "please, no interviews" when approached by a Reuters reporter for a comment at Kathrada's funeral.

Some analysts expected Zuma to act at or after a cabinet meeting later on Wednesday, the start of which was postponed to enable ministers to attend the burial service.

The president is not attending the funeral, in accordance with the wishes of Kathrada's family. Affectionately known as "Uncle Kathy", the liberation struggle stalwart who spent 26 years in prison under the apartheid government, was an open critic of Zuma.

Deputy President Cyril Ramaphosa led the government's delegation to the funeral, which included Gordhan. Former President Thabo Mbeki, Winnie Madikizela-Mandela, ex-wife of the late president Nelson Mandela, top ANC officials and EFF's Malema were also attending.

In a speech, Kgalema Motlanthe, a former deputy president who once served as caretaker leader of the country, said Kathrada had written an open letter to Zuma in April last year asking him to resign.

"Is it asking too much to express the hope that you will choose the correct way, that is gaining momentum, to consider stepping down?" Montlante said, reading from Kathrada's letter, which drew prolonged applause and a standing ovation.

Kathrada penned the letter after South Africa's top court ordered Zuma to pay back some of the $16 million of state money spent upgrading his private home. Zuma has since repaid the money, but the Constitutional Court's stinging rebuke hit the scandal-plagued leader financially and politically.

Zuma, 74, has shown no signs of stepping down before his second and final term as president ends in 2019. Backed by the top echelons of the ANC, he has survived several scandals since taking office in 2009.

Local media said Gordhan's dismissal had been discussed on Monday at talks between Zuma and the ANC-allied South African Communist Party, and that the ruling party's six top officials had discussed the finance minister's removal.

Njabulo Nzuza, Secretary General of the ANC Youth League, supported cabinet changes, saying a reshuffle was "normal".

Some pundits say Gordhan is being pressured by a faction allied to Zuma, which has criticised his plans to rein in government spending as the economy stagnates.

A cabinet source told Reuters that Wednesday's meeting might not consider the matter, adding: "Cabinet appointments are solely president's prerogative, therefore it won't be something he'll discuss there."

Gordhan briefly attended a court hearing in the capital Pretoria on Tuesday, following his arrival from Britain.

The court is hearing a case concerning the closure of bank accounts belonging to friends of the president, the Gupta brothers. The case has long been a bone of contention between Zuma and his finance minister.

Gordhan has asked the court to rule that he should not be expected to agree to requests by the Guptas that he intervene to help reverse a decision by major banks to close some of the business accounts of the brothers' Oakbay Investments.

Source: Timesofoman