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Rand Strengthens as Ramaphosa Wins ANC Election

Yesterday, the Rand strengthened considerably against the Greenback after Cyril Ramaphosa, Deputy President of African National Congress (ANC), won the closely contested party leadership election against the ANC MP Nkosazana Dlamini, ex-wife of Jacob Zuma. Ramaphosa is now in a strong position to become the country’s President after the general elections in 2019.

The ANC has governed South Africa for the past 23 years. Following the victory of Ramaphosa, a reformist candidate and favorite of global financial markets, the Rand is strengthening against the US dollar.

Earlier on Friday, Dlamini faced a setback when a court ruled against the eligibility of certain delegates of the ANC. Nearly 14 branches and 27 Provincial Executive Committee members were barred from voting. About 5,000 delegates cast their vote in a tough battle for the post of party leadership.

After leading the talks in the 1990s to end apartheid rule, Ramaphosa ventured into business. Thus, he has the backing of the business community. He is well known for his strong views against corruption. Dlamini is a sharp critic of white-owned businesses. As a veteran who served as Nelson Mandela’s health minister, Dlamini brought laws banning smoking in public places. She later served as the foreign minister of the country.

SABC Digital News

South Africa urgently needs reform as the official unemployment rate stands at a staggering 28%. More than 5 million people are affected by the HIV virus. Income distribution has become even more skewed than it was during the apartheid days.

The country’s sovereign debt rating was downgraded by Standard & Poor’s last month, below the investment grade level. Now, Moody’s is the only credit rating agency, which still maintains an investment grade rating for South Africa’s debt.

If Moody’s follow suit and downgrade, then South Africa will be removed from global bond indices. That could lead to the sale of index-based funds and outflow of foreign investments to the tune of ZAR 100 billion to ZAR 180 billion. Obviously, it will have a huge negative impact on the rand.

However, it seems that such a nightmare has been avoided temporarily due to the victory of Ramaphosa. The South African rand has now strengthened to the levels seen in March 2017. We may see the currency strengthen further to 11.20 levels.

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