The South African rand depreciated on Thursday as talks to form a government of national unity persisted. By 3:35 PM GMT, it was trading at 18.4150 against the dollar, marking a 0.14% decrease from its previous closing rate.
On the stock market, the Top-40 index closed 1% lower. Meanwhile, South Africa’s benchmark 2030 government bond strengthened, with the yield decreasing by 2 basis points to 10.105%.
The Inkatha Freedom Party (IFP) of South Africa stated on Wednesday that it would be willing to join a unity government with the African National Congress (ANC) and the Democratic Alliance (DA). This comes after no party managed to secure a parliamentary majority in last month’s elections.
The ANC, in power since the end of apartheid 30 years ago, lost its majority in the May 29 election, creating unprecedented political uncertainty in the democratic era.
Both the ANC and the DA have not confirmed any such agreement. The markets prefer a government that includes the pro-business DA.
According to analysts at Rand Merchant Bank, “Investors are awaiting any indications of a formal agreement among the different political parties to establish a government of national unity.”