South Africa's rand on the backfoot after cabinet reshuffle

South Africa's rand on the backfoot after cabinet reshuffle
South African Rand coins are seen in this photo illustration
JOHANNESBURG (Reuters) - South Africa's rand was a touch weaker in early trade on Wednesday, on the backfoot against a firming dollar and negative sentiment spurred by another cabinet reshuffle by President Jacob Zuma.

At 0630 GMT the rand had weakened 0.11 percent to 13.41725 per dollar compared to a close of 13.4025 overnight in New York.

The rand fell to a low of 13.4700 in the previous session after some quick selling after Zuma changed six ministers in his second cabinet reshuffle in seven months.

Market focus was on Zuma's decision to appoint a close associate as energy minister in what is seen by some as a bid to push through a big nuclear deal.

While the initial sell-off on the rand was not as sharp as previous cabinet changes, traders said the move, combined with a resurgent greenback, swung momentum against the currency.

"Some rand premium relative to other risk currencies still exists but we would be cautious against expecting ongoing losses ... the norm is for a knee-jerk reaction in the rand to be followed by some correction," RMB currency strategist John Cairns wrote in a note.

September price growth data due at 0800 GMT.

Stocks were set to open slightly lower at 0700 GMT, with the JSE securities exchange's Top-40 futures index down 0.08 percent.

In fixed income, the yield on the benchmark government bond due in 2026 was up 1 basis points at 8.75 percent.

(Reporting by Mfuneko Toyana; editing by Jason Neely)

2017-10-18 09:16:05

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