South African Rand continued its slide against the dollar on Wednesday following President Jacob Zuma’s narrow win in a motion of no-confidence.
Prior to the no-confidence vote on Tuesday, the Rand had taken a turn for the better, indicating that investors had expected a win on the opposition parties’ side.
But after the outcome of the vote was announced, the Rand took a leg down and has been down 1.7 per cent since yesterday.
On Monday, the major currency emerged the best performing legal tender, just as National Speaker Baleka Mbete announced that the motion of no confidence would be conducted through secret ballot.
At 12:45, the Rand continued its slide on Wednesday, declining 0.73% to 13.4756 per dollar. Apparently, the fall in the local currency appears to represent an established pattern in which Zuma has a ‘negative’ impact on the Rand.
Citigroup analysts warned that the rand could likely “take on more water over the next few weeks as the tactical opportunity has passed and the challenges associated with credit rating updates, fiscal slippage and political brinkmanship loom large.”
Global banking and financial services company Commerzbank opined that despite the abrupt change in fortunes, the result is unlikely to be a trigger for excessive currency weakness as the defeat of the motion was largely priced in beforehand.
After a long and laborious voting process via secret ballot, President Zuma survived another attempt to oust him from power.
National Assembly speaker Baleka Mbete announced that 384 MPs voted. 177 MPs voted in favour of the motion, 198 voted against while nine MPs abstained.
From the tally, it was found that 26 ANC MPs voted in favour of the motion to remove their party’s leader. The ANC enjoys a majority in Parliament with 249 of the 400 National Assembly seats; opposition parties control 151 seats.
Previous motions of no confidence brought by the opposition have been stifled by the ruling party. However, the latest was the eighth, the only one by secret ballot and the first time ANC MPs voted with the opposition.
Under President Zuma’s leadership, the country has slipped into recession and has seen unemployment rise to a 14-year high.
Zuma’s tenure ends in 2019, having been elected in May 2009. The ANC is also expected to elect his successor at its December elective conference.