South African bonds plunged the most since December and the rand weakened for a second day after a report said finance minister Pravin Gordhan had been summoned by police, raising concern the national treasury chief may be replaced.
Gordhan received “correspondence” from the Hawks unit and is getting legal advice, treasury spokesman Phumza Macanda said after the Daily Maverick reported on Wednesday the finance minister and four former tax officials had been asked to report to their office on Thursday.
Gordhan was informed he would receive a “warning statement” given to accused persons before they are charged, the news website reported, without saying where it got the information.
The report reopened concern about a rift between President Jacob Zuma and Gordhan after the ANC at the weekend called on the government to “reprioritise” the budget as it tries to win back support after a drubbing in local government elections earlier this month.
“The threat that finance minister Gordhan will no longer be able, or perhaps willing, to continue in his position is now real,” John Cairns, a currency strategist at Rand Merchant Bank in Johannesburg, said in an e-mailed note. “Expect further volatility today and the risk bias is now clear.”
Yields on benchmark government rand bonds due in December 2026 jumped by 47 basis points by 8.40am on Thursday to 8,99%, the biggest move since Zuma roiled markets in December by firing then-finance minister Nhlanhla Nene and replacing him with a little-known lawmaker.
The rand slid 0,9% to R14,13/US$, heading for the weakest closing level since 28 July. The currency plunged by 3,1% on Wednesday. — (c) 2016 Bloomberg LP
