South African rand wobbles as President Zuma recalls finance minister

Pravin Gordham
Pravin Gordham, South Africa's finance minister, has been recalled

The South African rand has fallen once again after reports that President Jacob Zuma has ordered his minister, Pravin Gordhan, back from a trade trip to Britain yesterday, fuelling investor fears that he is about to be fired.

A feud between Mr Zuma, 74, and Mr Gordhan, 67, over the management of state-owned companies and a bid for Russia to build nuclear power plants in the country has rattled confidence and caused the rand’s value to fluctuate.

The South African currency lost 0.5pc against the US dollar on Tuesday and is down around 4pc since news of the recall broke.

Jacob Zuma
Jacob Zuma

Investors see Mr Gordhan as a symbol of stability in South Africa, where the economic growth is close to zero and six million people (27pc of workers) are jobless. He  arrived in the UK at the weekend at the head of a delegation of business and union leaders on an investor roadshow to drum up interest in South Africa.

Credit ratings agencies Fitch and Standard & Poors have warned South Africa that it risks being downgraded to “junk” status if tensions within the ruling African National Congress (ANC) continue. 

Meanwhile, attempts to remove Mr Zuma as president have been consistently rejected by senior ANC figures, despite a big drop in its support in the polls and in municipal elections last year.

workers in a line
South Africa has been battling high unemployment

The ANC had won every election by a landslide since the end of apartheid in 1994, but lost the country’s economic hub, Johannesburg, the capital, Pretoria, and Port Elizabeth to the Democratic Alliance (DA) last year.

The election was held three months after South Africa’s highest court ruled that Mr Zuma violated his oath of office by refusing to repay taxpayer funds spent on upgrading his private home. Mr Zuma later paid back a portion of the money.

Last year, South Africa’s corruption ombudsman ordered a judicial inquiry into possible criminal and corrupt dealings between ministers and the wealthy Gupta family, who Mr Zuma says are his good friends.

Mr Zuma is due to step down as ANC leader in December but, before then, he may have to fend off 783 corruption charges linked to an arms deal more than a decade ago. The charges had been dropped but could now be reinstated by the Supreme Court of Appeal. 

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