South African Rand Plunges on Report Gordhan Summoned by Policeby
Report raises concern of rift between Gordhan and Zuma
Gordhan committed Treasury to spending caps, debt reduction
South Africa’s rand fell to its weakest level against the dollar in three weeks after the Daily Maverick said a police unit had ordered Finance Minister Pravin Gordhan to report to its offices on Thursday, raising concern the National Treasury chief may be replaced.
Gordhan was informed he would receive a “warning statement” given to accused persons before they are charged with an offense and to warn them of their rights, the news website reported, without saying where it got the information. The investigation relates to the period when Gordhan was head of the tax-collection agency. Four former tax officials have been sent letters informing them of the charges against them, according to the Daily Maverick.
The report reopened concern about a rift between President Jacob Zuma and Gordhan, said Wichard Cilliers, a trader at Treasuryone (Pty) Ltd. in Pretoria. Gordhan committed the Treasury to reducing debt and capping spending, while the ruling African National Congress at the weekend called on the government to “reprioritize” the budget as it tries to win back support after a drubbing in local-government elections earlier this month.
“It’s political turmoil and investors in the international market don’t like the fact that there’s a possibility that Pravin Gordhan could go as finance minister,” Cillers said by phone. “They see him as a credible finance minister. Gordhan is a thorn in Zuma’s flesh.”
The rand plunged as much as 3 percent to 13.9816 per dollar, the weakest level since Aug. 3, after trading as much as 1.1 percent stronger earlier. The currency was 2.4 percent weaker at 7:08 p.m. in Johannesburg, the worst performance out of 31 major and developing-nation currencies monitored by Bloomberg.
The Sunday Times newspaper reported in May that Gordhan may face dismissal and arrest on espionage charges for setting up the South African Revenue Service’s National Research Group to spy on politicians including Zuma. Gordhan denied any wrongdoing and said he was being harassed by people intent on manipulating the justice system for political gain, while Zuma’s office denied there was a rift between him and the finance minister.
Gordhan “received correspondence” from the Hawks police unit on Monday, National Treasury spokeswoman Phumza Macanda said in a text message. Hawks spokesman Hangwani Mulaudzi didn’t answer calls to his mobile phone.
Gordhan was reappointed as finance minister in December after Zuma roiled markets by firing Nhlanhla Nene from the position and replacing him with a little-known lawmaker. He had first served as finance minister from 2009 to 2014.