SA Rand Nosedives As Zuma Recalls Gordhan And Jonas From The UK

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The SA rand nosedived to R12,65 just as President Jacob Zuma halted the international investors roadshow embarked on by Finance Minister Gordhan and his deputy, Mcebisi Jonas.

Report from the presidency has it that Zuma ordered the Finance Minister Gordhan and his deputy Jonas, to return to South Africa from the United Kingdom where they went on a non-deal international investor roadshow this week.

The delegation, including including Treasury’s director-general, Lungisa Fuzile, and business and labour representatives, were supposed to spend two days in London (March 27 and 28), one day in Boston in the United States (March 29), and two days in New York (March 30 and 31), according to a statement by Treasury on Saturday.

The presidency confirmed their recall and following the report, the rand plunged by 29 cents to R12.60/$ after reaching a high of R12.31/$.

“President Jacob Zuma has instructed the Minister of Finance, Mr Pravin Gordhan and Deputy Minister Mcebisi Jonas to cancel the international investment promotion roadshow to the United Kingdom and the United States and return to South Africa immediately,” Zuma’s spokesman Bongani Ngqulunga said in a terse statement.

Read Also: Mcebisi Jonas Launches Scathing Attacks On President Zuma And The ANC

Minister Gordhan was in London with Business Unity South Africa and other role-players where he was to discuss with investors on sectors in SA where they could invest in.

Deputy Finance Minister Mcebisi Jonas was also expected to begin the second leg of the roadshow in the United States. But it’s understood that he will be on an overnight flight back to South Africa.

The order for Minister Gordhan and his deputy to return has fueled speculation of a Cabinet re-shuffle where Zuma may oust Gordhan.

The speculation that a cabinet reshuffle is imminent is not new as a number of economists have been predicting that Zuma was looking for an appropriate time to execute his cabinet reshuffling.

Economists back up their speculations with the argument that since Pravin Gordhan became the new minister, he been faced by threat of being fired by the president who according to them, sees him as blocking his access to the state treasury.



Both the Hawks and the National Prosecuting Authority (NPA) have admitted to investigating Gordhan after he became finance minister and all were geared towards having him removed.

Though it is still not yet known why the minister and his deputy were called back, concerned individuals linked the call to Gordhan’s application seeking an order that he cannot interfere in the Guptas’ clash with banks, which is due to be heard in the high court in Pretoria on Tuesday.

London’s leading SA-focused analyst, Nomura Emerging Market economist Peter Attard-Montalto says this is a shock: “Zuma has laid down a clear red line between him and Gordhan.”

He said that it laid down a market which Minister Gordhan either had to obey to show Zuma is viewed as stronger, or disobeys and challenges Zuma to fire him.” By aborting the roadshow, Gordhan has taken the first option.

“This is a dramatic shift in risks clearly given the baseline had been originally that a reshuffle would not see PG touched. The chances of PGxit are now clearly higher. However PG is used to playing such high stakes political poker games. It seems this week is going to be really decisive either way. It is also possibly that Zuma wants PG there if he only reshuffles the deputy.”

He continued by saying he believe today would be a “test of the water to undertake a reshuffle”. The Presidency has seen such a strong ZAR and is wondering how much of a political shock it can take – they do watch these things closely.

“So far the market reaction has been very muted, suggesting they could indeed go ahead with a reshuffle. The market should not forget they are part of the circle of cause and effect. In this sense the lack of risk premia here is inadequate but also a causal factor…. I don’t think this is considered enough by investors.”

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However, an interesting point made by emerging markets economist Peter Attard Montalto on Fin24 said that its not clear if Pravin Gordhan and his team have obeyed the instruction…

The schedule for the investor roadshow will reportedly remain in place without Gordhan and Jonas.

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