Many South Africans breathed a sigh of relief when the GNU was formed because it was good news for the economy. Now we wait for the cabinet.
Forming the Government of National Unity was good for the Rand and the markets this week and all eyes, including those of investors, are now on the new cabinet that will hopefully be announced soon.
“Positive local economic data played along and global dynamics did not derail the optimism towards South Africa. The Rand strengthened below R18/$ for the first time since August 2023, stocks surged and bond yields declined amid strong demand for local bonds. The Rand exchange rate appreciated by more than 2% against the dollar, euro and pound from last Thursday. She says the Rand closed at below R18/$ for the first time this year on Wednesday but pulled back a little on Thursday.
“The local currency broke through R18.00/$ against the dollar for the first time in 10 months, and it is trading around R17.98 this morning. Over the coming days, the local unit’s direction will be determined by the composition of the national cabinet, which the president is expected to announce over the weekend.”After headline consumer inflation came in unchanged at 5.2% in May, Matshego and Nkonki expect inflation to remain sticky at around 5% until the end of the third quarter.
They say the president’s forthcoming announcement of his cabinet is now of paramount importance, particularly for the critical ministries of finance, public enterprises, trade, industry and competition, agriculture, land reform and rural development and international relations and cooperation. Matikinca-Ngwenya, Mkhwanazi, Sithole and Mano also point out that there are two critical indicators that underscore a strong case for accelerating pro-growth reforms: unemployment and inequality.
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