It’s a big day for South Africa, and by extension for the rand.
The currency rallied yesterday on news that lawmakers will vote in secret on whether to fire president Jacob Zuma, with the free nature of the ballot raising the chance somewhat that he will be removed. That has left the dollar at ZAR13.24.
We see the rand’s reaction to the vote as binary – the dollar potentially testing ZAR12.85/90 on a rejection of South Africa’s president since 2009 or alternatively rallying to ZAR13.55/60 should the no-confidence vote fail.
The balance of risks probably favours an insufficient number of ANC MPs defecting, the vote failing and the rand weakening.