Smooth vote keeps currency near two-month high
The rand traded near a two-month high early today and looked to further those gains in an upbeat market after an internal ANC election passed off smoothly and US officials appeared to make progress in talks about the fiscal cliff.
The unit held firm yesterday after President Jacob Zuma won a second term as party leader, almost certainly giving him a second five-year term as the nation’s president in 2014 elections.
Investors also took heart at the ANC’s choice of respected businessman Cyril Ramaphosa as deputy president.
“There could have been a shift towards a leader or group of leaders that may favour greater state intervention,” said Christopher Shiells, emerging market analyst at Informa Global Markets.
“Investors see Ramaphosa as pro-business and are hoping that early signs of a more business-friendly approach develop during the rest of the conference.”
“There is something to be said about understanding the environment in which one will be trading and it is clear that with Zuma at the helm, it will be business as usual and more of the same,” ETM analysts said in a note.
“The markets can be content in the knowledge that someone who understands business and the importance of delivery is playing a key role,” they added, referring to Ramaphosa.
The conference ends tomorrow and with the leadership election out of the way, investors will focus on any policy changes such as new regulations or taxation for the mining sector.
Changes look to be on the cards after Deputy Finance Minister Nhlanhla Nene said on Monday that the government would not be “reckless” with the decision.
Optimism that the US would resolve expiring laws that would cut government spending, raise taxes and reduce the budget deficit – but also likely plunge the world’s biggest economy into recession – were also boosting risk appetite.