If there were any doubts that the euphoria following Cyril Ramaphosa’s election as president of South Africa has worn off, this week’s slump in the rand has removed them.
The currency has plunged to a level last seen when Jacob Zuma was still in charge, having retreated from a three-year high against the dollar amid a toxic cocktail of negative economic news, political risks and falling commodity prices. An investor retreat from emerging markets has accelerated its slide of almost 10 percent against the dollar this month.
When Ramaphosa took over as president in February, he promised to stimulate growth and attract investment, fix the finances of state-owned enterprises, and root out the corruption that marked Zuma’s administration.
Investors took note: the rand surged to a three-year high in February and borrowing costs fell as inflows into the country’s bonds and stocks surged. The mood was dubbed “Ramaphoria.” There’s no sign of it now.
“It seemed there were exaggerated hopes for quick changes in politics and economy,” said Elisabeth Andreae, a Frankfurt-based economist at Commerzbank AG. “These were reflected in the strong rand at the beginning of the year. At an early stage we warned that it would take longer to fix the deep problems South Africa and the economy are facing.”
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