"Havoc" for Rand under the plans to nationalize the Reserve Bank


According to President Cyril Ramaphosa's announcement on Thursday that the government intends to further nationalize the central bank with the "chaos" in the trading areas, said Bianca Botes, Corporate Treasury Manager at Peregrine Treasury Solutions.

The rand opened Friday morning at R $ 14.50 for the greenback, weakening 0.25% and trading at 10:14 at $ 10:14.

Ramaphosa, who answered questions in parliament on Thursday, said the state intends to move on with the plan to abolish the over 700 private shareholders of the bank.

This follows a resolution of the ANC at its 54th Nasrec Conference in 2017, where Ramaphosa was elected ANC President to 100% state-owned bank.

"The government must develop a proposal to ensure full public ownership in a way that private sector speculators will not benefit," she said.

On Thursday, Ramaphosa said the SA's private participation in the central bank was a historical anomaly.

"SA is one of only six countries in the world still involved in its central banks," said Ramaphosa.

"These [nationalisation] is the thing that is being done around the world. The central bank is one of the most important institutions in the life of our country. And that's exactly what the ANC should do, "he added.

Botes said that the bank's decline on Thursday was down 1% on more than one factor, but the most important one was Ramaphosa's statement.

"This has long been a highly controversial issue, condemning both rating agencies and the public," she said. She added that as soon as the "shock factor" subsided, analysts would seek both mandate and independence.

"While SARB's current shareholders have no direct or indirect influence over the SARB's mandate, it is not surprising that this will be the case when the sole shareholder becomes a governmental body, admittedly having problems in eradicating corruption per se. "

Analysts said the rand was also weakened as the European Central Bank cut its growth forecasts for the Eurozone.

"The real kick for the rand and other emerging market currencies was the impact after the ECB meeting [on Thursday]"said Andre Botha, Senior Dealer at TreasuryONE, in a morning announcement.

"The ECB not only lowered its growth forecast, but also introduced favorable loans to banks to stimulate the credit cycle of European banks."