The South African rand strengthened on Friday as people became hopeful that the Democratic Alliance (DA) and the African National Congress (ANC) would agree on cabinet positions. This followed reports of a major disagreement between the two parties the previous day.
At 09:40 GMT, the rand was trading at 18.2150 against the dollar, about 1.4% higher than its previous close. The currency had dropped sharply on Thursday after reports suggested that a deal between the two largest parties in the unity government was at risk.
A source from the DA involved in the talks told Reuters on Friday that the party was still committed to negotiating cabinet positions and was “not yet issuing ultimatums or drawing lines in the sand.”
This statement came after reports from News24 and Business Day indicated that the ANC had withdrawn an offer to give the DA the trade and industry ministerial portfolio, which had angered the DA.
Financial markets are nervous about the composition of the new cabinet, as it will provide an early indication of how the ANC plans to share power in the government of national unity (GNU). This follows the ANC losing its parliamentary majority in last month’s election.
Earlier this week, ANC and DA officials told Reuters that the cabinet was likely to be announced on Wednesday or Thursday. However, it remains unclear when the announcement will be made.
South Africa’s benchmark 2030 government bond strengthened, with the yield dropping by 22 basis points to 9.905%. On the Johannesburg Stock Exchange, the blue-chip Top-40 index (.JTOPI) traded over 1% higher.
