South Africa’s booming wine industry
High-profile politics in South Africa has slammed the country’s currency.
The rand nosedived nearly 4% against the dollar after President Jacob Zuma ousted his experienced finance minister, Pravin Gordhan, plunging the country into a new round of political turbulence.
Zuma announced in a statement Thursday night that he was replacing Gordhan and a slew of other top ministers.
Investors were already fretting about Gordhan’s job security after Zuma on Monday ordered him to cancel a series of meetings with foreign investors and return home. That move also hit the rand, which is now down about 8% since the start of the week.
Analysts warned earlier in the week that dismissing Gordhan and other key cabinet ministers could cause chaos.
"This would be the worst outcome for markets over both the short and medium term," John Ashbourne, Africa economist at Capital Economics, wrote in a research note on Wednesday. He warned it’s likely to worsen tensions within the governing party, the African National Congress.
Gordhan built a reputation as a steady hand who expertly guided South Africa’s economy and promoted its business interests. He first served as finance minister between 2009 and 2014, and returned to the job in December 2015, much to the relief of international investors.
South African Finance Minister Pravin Gordhan, who was ousted late Thursday, built a reputation as a steady hand.
Zuma brought him back after sacking two other finance ministers in December 2015, a period of turmoil that hammered South Africa’s markets and currency.
Gordhan was credited with helping stabilize the situation. Before this week, the rand had strengthened more than 20% in a year.
But Gordhan and Zuma clashed over issues such as the management of state-owned enterprises and the need for a big new economic plan, according to Ashbourne.
In October, Gordhan described a move to prosecute him over fraud charges as "political mischief." He denied any wrongdoing, and the charges were soon dropped after widespread criticism from political and business leaders.
The president’s office and the national director of public prosecutions repeatedly denied that the aborted prosecution was politically motivated by Zuma’s intention to take control of the Treasury.
Gordhan’s replacement is Malusi Gigaba, who until Thursday was the home affairs minister. He becomes South Africa’s fourth finance minister in less than 18 months.
— Eleni Giokos and David McKenzie contributed to this report.