South Africa’s currency dipped to an unprecedented low against the US dollar after the country’s finance minister was suddenly fired.
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The South African rand dropped about 5.7 percent against the dollar after the announcement, holding at record lows of about R15 to the dollar.
“We believe his (Van Rooyen’s) experience and tenure as the ANC National Assembly Whip for both Finance Portfolio Committee and ANC Caucus’ Economic Transformation Cluster will enable him to provide the necessary leadership in the department”, Kodwa said.
Credit agency Fitch downgraded South Africa last Friday, leaving the continent’s most sophisticated economy just one notch about “junk” status, and said on Thursday Nene’s firing “raised more negative than positive questions”.
Government officials said Nene would be moved to another post, according to reports.
“Politics and obfuscation will prevent South Africa knowing the real reason why such a critical minister at a critical time has been replaced”.
South Africa’s rand hovered near a record low and its five-year CDS leapt to a six-year high after the finance minister was sacked while emerging equities hit fresh two-month lows, falling for the seventh straight day.
Finance Minister Nhlanhla Nene, who was dismissed late Wednesday, had been seen as a steady hand who was trying to rein in government spending and address the country’s ballooning budget deficit.
Political analyst Daniel Silke said the decision sends the wrong signal about South Africa’s ailing economy.
Anti-tolling group Opposition to Urban Tolling Alliance’s (Outa) founder Wayne Duvenage (@wayneduv), said: “Will big business now wake up and stand up and tell Zuma, the tax revolt begins”.
It is still unclear why President Zuma made the sudden decision.
“Even for ministers in the belly of the beast of the Zuma presidency, it seemed too absurd, too reckless, too deadly to suddenly remove the Minister of Finance for no good reason”, wrote Ranjeni Munusamy on the Daily Maverick news site.
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In his speech, Mr. Zuma called for the “liberation” of Africa, and urged African governments to use their political power to take control of “economic power”. Earlier in December he had stymied an attempt by Dudu Myeni, the chairman of perennially loss-making South African Airways, to sign contracts that appeared to make little financial sense. Instead, we had to bear the burden of David Des van Rooyen, and the instability to our currency and markets. “He is engaging in actions that parts of his party find repulsive and there is a point beyond which a system under stress can quickly unravel as the connections snap”. (He said he was moving him to “another strategic position”.) Mr Nene had earned the trust of investors (and the irritation of other ministers) by consistently trying to hold the government to its pledge to limit increases in state spending.
