South African President Zuma’s to resign smoothly as the economy is growing
|Six weeks after his replacement by new leader Cyril Ramaphosa of his party, the African National Congress (ANC) who was expected to meet today in order to decide whether it would force President Zuma to leave his functions is finally postponed later this month. According to internal sources, Zuma and Deputy President Ramaphosa came closer to an agreement and were “discussing formalities” of current President’s exit. On the schedule was also expected Zuma’s speech as part of the State of the Nation Address at the parliament assembly, which, in turn, had also to be postponed as a result of “fears of violence” among parliamentarians.
Since recent communications of a commonly agreed resignation among participants, and as the transition finally comes to be done “smoothly”, we see no obstacles as to further USD/ZAR depreciation, currently valued at 11.96 (-4.0% YTD). Since the beginning of 2018, ZAR is currently the best performing currency against the greenback (EUR/USD Cross: -2.65%, GBP/USD Cross: -2.61%, USD/JPY: -2.72%). South African economy maintains a strong 2018 economic outlook, boosted by January Business Confidence at 99.70 (December: 96.40), higher-than-expected trade balance surplus of ZAR 15.70 billion (USD 1.313 billion, expected: USD 0.844 billion) and inflation maintained at 4.70%. Since recent steep decrease of FTSE/JSE 40 index, largely due to political uncertainty, we remain confident that South African equities are on the way to recovery.
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