South African rand, bonds tumble on panel findings against president

(Updates prices)

JOHANNESBURG, Dec 1 (Reuters) - The South African rand and government bond prices fell sharply on Thursday as investors digested news that President Cyril Ramaphosa may be impeached following a panel of experts' findings against him.

The rand ZAR= ZAR=D3 weakened by 2% to close at 17.55 against the dollar in New York, posting its largest percentage decline since June 10. It fell as far as 17.965 per greenback during the session.

The yield on South Africa's benchmark 10-year local bond closed up 65 basis points at 10.935% ZAR2030= after spiking to 11.185% in the biggest daily move since the March 2020 COVID-19 induced market rout.

South Africa's presidency hangs in the balance, a day after a panel report found preliminary evidence that he may have violated his oath of office and committed misconduct.

The president has denied any wrongdoing. Ramaphosa has not been charged with any crimes.

"The uncertainty around Ramaphosa's presidency has caused a selloff of the local currency as investors now wait for clarity on the ramifications of the report, and what that could mean for the president," said Bianca Botes, director at Citadel Global.

The growing uncertainty around his political future will weigh negatively on sentiment, said Barclays in a note, adding that it could slow the "positive momentum" that South African credit spreads have enjoyed.

South Africa's sovereign dollar-denominated bonds dropped across the curve with longer-dated maturities suffering the biggest losses. The 2052 issue slipped 2.347 cents to trade at 85.867 cents in the dollar, Tradeweb data showed. US836205BE37=TE

South Africa's five-year credit default swap, which insures against a sovereign default, rose 22 basis points on the day to 266 basis points according to S&P Global Market Intelligence.

While the Johannesburg Stock Exchange closed higher, with the all-share index .JALSH up 0.26% to 75,020 points, the banks, whose performance largely depend on the local economy, tumbled. The stock market banking index .JBANK closed down 8.18% at 9635.29 points.

In London, shares in financial companies Investec INVP.L , Old Mutual OMU.L , Ninety One N91.L , and miner Anglo American AAL.L fell 9%, 12%, 5% and 3% respectively, as the falling rand hit shares of South Africa-exposed companies.

Some currency traders noted that the rand was not yet at annual or historically weak levels against the U.S. dollar. Thursday's close was the weakest in less than a month.
Reporting by Alexander Winning, Kopano Gumbi, Rachel Savage and Promit Mukherjee in Johannesburg, Karin Strohecker in London and Rodrigo Campos in New York; Editing by Alison Williams and Stephen Coates

Disclaimer: The XM Group entities provide execution-only service and access to our Online Trading Facility, permitting a person to view and/or use the content available on or via the website, is not intended to change or expand on this, nor does it change or expand on this. Such access and use are always subject to: (i) Terms and Conditions; (ii) Risk Warnings; and (iii) Full Disclaimer. Such content is therefore provided as no more than general information. Particularly, please be aware that the contents of our Online Trading Facility are neither a solicitation, nor an offer to enter any transactions on the financial markets. Trading on any financial market involves a significant level of risk to your capital.

All material published on our Online Trading Facility is intended for educational/informational purposes only, and does not contain – nor should it be considered as containing – financial, investment tax or trading advice and recommendations; or a record of our trading prices; or an offer of, or solicitation for, a transaction in any financial instruments; or unsolicited financial promotions to you.

Any third-party content, as well as content prepared by XM, such as: opinions, news, research, analyses, prices and other information or links to third-party sites contained on this website are provided on an “as-is” basis, as general market commentary, and do not constitute investment advice. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, it would be considered as marketing communication under the relevant laws and regulations. Please ensure that you have read and understood our Notification on Non-Independent Investment. Research and Risk Warning concerning the foregoing information, which can be accessed here.

We are using cookies to give you the best experience on our website. Read more or change your cookie settings.

Risk Warning: Your capital is at risk. Leveraged products may not be suitable for everyone. Please consider our Risk Disclosure.