- Currency biggest decliner of 31 emerging-market, major units
- Finance Minister Gordhan held media briefing after roadshow
The rand dropped as much as 2.4 percent against the dollar as Finance Minister Pravin Gordhan failed to reassure investors that the Treasury’s independence isn’t under threat amid a policy investigation of the tax department.
Weaker commodity prices also weighed on the currency, which breached a technical barrier that triggered automatic sell orders, known as stop losses. The South African unit fell the most among 31 emerging market and major currencies trading against the dollar tracked by Bloomberg. Gordhan has complained of “harassment” by a special police unit that wants him to answer questions about a unit in the tax agency that investigated political leaders.
By 5:47 p.m. in Johannesburg, the rand was down 2.3 percent to 15.5759 against the dollar, the biggest drop on a closing basis since Feb. 26, after earlier being as strong as 15.2045. Government bonds retreated after three days of gains, with yields on the benchmark rand-denominated issue adding three basis points to 9.14 percent.
“A lot of this afternoon was the build up towards the Pravin Gordhan meeting,” said Wichard Cilliers, a trader at Treasuryone. “No one was sure exactly what was going to be said. A lot of that weakness pushed it to about 15.40 and then the commodity play has taken us up above the 15.50 mark.”
The investigative unit in the tax agency was set up when Gordhan led the revenue service before 2009. Gordhan is also facing demands by the opposition Democratic Alliance party to respond to reports that President Jacob Zuma’s friends, the Gupta family, met Deputy Finance Minister Mcebisi Jonas on Nov. 27 to offer him the ministerial post.