By Bhargav Acharya and Tannur Anders
JOHANNESBURG (Reuters) -South Africa’s rand fell on Wednesday after the African National Congress (ANC) said it was leaning towards trying to form a government of national unity following its failure to secure a majority in last week’s election.
At 1623 GMT, the rand traded at 18.96 against the dollar, around 1.3% weaker than its previous close.
“(The) rand is trading very choppy on the back of some headlines we have seen come out from the ANC,” said Wichard Cilliers, director and head of market risk at TreasuryONE.
The ANC has been meeting with all interested parties keen to contribute ideas to form a government, ANC spokesperson Mahlengi Bhengu-Motsiri told a press conference.
“At this point in time the conversation is looking at the government of national unity,” Bhengu-Motsiri said, adding the party has held discussions with the business-friendly Democratic Alliance and radical left Economic Freedom Fighters, among others.
The ANC’s National Executive Committee will hold high-stakes internal discussions on Thursday to deliberate on the options.
The DA told Reuters on Wednesday that if the idea is to include the uMkhonto we Sizwe (MK) party, the Economic Freedom Fighters (EFF) and the Patriotic Alliance (PA) in the executive, then the current decision is that the DA would not join those parties in a government.
“Sidestepping the DA entirely in favour of a far more radical government built around an ANC-EFF-MK partnership would certainly be very unfavourably looked upon from a business perspective,” Markus Korhonen, senior associate in strategic intelligence at S-RM, told Reuters before the DA commented.
“The DA and the ANC are not worlds apart in their economic policies,” Korhonen added.
The ANC party of liberation hero Nelson Mandela is still the largest but can no longer govern alone. It said it was determined to unite the broadest range of sectors in society.
On the Johannesburg Stock Exchange, the blue-chip Top-40 index was little changed.
South Africa’s benchmark 2030 government bond was stronger, with the yield down 1.5 basis points at 10.715%.
(Reporting by Tannur Anders and Bhargav Acharya; Editing by Kirsten Donovan and Ros Russell)
