The rand slumped for a second day on Tuesday, unwinding almost all the gains it had made on hopes that the president could be unseated from office last week.
The rand strengthened when news of Mr Zuma’s potential ousting broke last week, but the currency moved into reverse as it became clear that the president had secured the support of the majority of committee members in the meeting in Pretoria over the weekend.
The rand’s losses accelerated on Tuesday, and at publication time the currency was 1.3 per cent weaker against the dollar for the day, at 13.12 per dollar.
Nomura’s Petter Attard Montalto said “the lack of Zumxit* this past weekend is not a surprise”, but was surprised by the apparent extent of support for Mr Zuma within the NEC meeting – three quarters of members who spoke on the recall motion were in favour of the President, according to local press reports.
Mr Attard Montalto said “the anti-Zuma crowd are too scared or too compromised or too threatened to speak out and hence their view does not count”.
Nomura has frequently accused markets of being too optimistic about South Africa, and Mr Attard Montalto reiterated his view that investors are likable to “overplay potential positives and underplay negatives”.
In his view, investors hoping for a major political shift as the ANC prepares for its upcoming leadership election are likely to be disappointed: the most likely outcome, he says, is a victory for Nkosazana Dlamini-Zuma, Mr Zuma’s ex-wife and preferred successor, which “cements the political status quo”.