The South African rand plummeted nearly 1% on Thursday, leading a decline in emerging market currencies, as concerns mounted over delays in forming President Cyril Ramaphosa’s cabinet. The rand’s value dropped to R18.35 per US dollar, its worst performance among developing nations this week, amid growing uncertainty over the country’s political landscape.
The Democratic Alliance’s (DA) threat to exit the Government of National Unity (GNU) has sparked fears of political instability, driving the rand’s decline. The DA’s withdrawal from the GNU would likely hinder the government’s ability to implement effective policies, further weakening the economy.
As the political situation unfolds, investors are becoming increasingly cautious, leading to a sell-off in rand-denominated assets. The rand’s decline has also made imports more expensive, potentially fueling inflationary pressures.
The delays in forming a cabinet have raised concerns over the government’s ability to address pressing economic issues, including high unemployment and poverty. The rand’s weakness may persist until a resolution is reached, restoring confidence in South Africa’s political and economic stability.
