The international market has become very weary of SA’s constantly tumultuous finance minister position. The current finance minister, Pravin Gordhan has once again been summoned by the police force, causing SA’s Rand to slump in the international currency market.
Mr. Gordhan could face charges in relation to an alleged rogue unit at the state tax revenue service. He was first summoned in May when local media in SA speculated that he would face espionage charges over an investigation unit that was set up at the South African Revenue Service when he was in charge of the tax collection agency several years ago.
Reuters reported that Gordhan and other former officials at the South African Revenue Service (SARS) must report to the Hawks on Thursday morning in relation to contravention of surveillance regulations. The Treasury also confirmed that Mr. Gordhan has been contacted by the elite police unit.
Analysts lay the cause of all the espionage drama at the feet of a deteriorating relationship between the finance minister and President Jacob Zuma. President Zuma has rejected allegations by opposition parties that he has failed to publicly back Gordhan, saying that the law should take its course but speculation persists that all this is a plot to oust Gordhan.
Whether or not there is a political bent to these investigations, even the suggestion of Gordhan’s removal has sent SA’s Rand on a sharp nosedive. The rand fell one percent early on Wednesday to its weakest in nearly a month. That fall extends a drop of 3 percent from the previous session when the news about Gordhan emerged.
Bonds also slumped with the yield on benchmark 2026 issue rising 46 basis points to 8.935 percent. South Africa’s stock market banking index opened almost four percent down.
This is Gordhan’s second stint as finance minister and only because Zuma spooked investors in December by replacing then finance minister Nhlanhla Nene with relatively unknown lawmaker David van Rooyen, causing markets to tumble.