George Glynos, MD at ETM Analytics, says the current political climate affects the rand but we should not overplay short-term effects.
I tend to describe the rand as a tinderbox filled with paraffin and the political environment that oversees the whole thing is like a match. So when it hits the mixture, it flares up. The rand is a fragile currency and it doesn't take much to be driven weaker.— George Glynos, ETM Analytics
Glynos says these things are short-lived however and we should not overplay short term political events.
But the markets do not like any notion that a good finance minister being fired might be in the offing.
The markets saw the damage it did when a good finance minister exited the first time round and they do not want to see a repeat of that. When it comes to Pravin Gordhan, they trust him and they do not want to see him depart.— George Glynos, ETM Analytics
Glynos is upbeat about the future of the currency.
I'm quite bullish about the rand in the second half of the year, despite all the bad news. We think this is an inflection point for the rand, and the quicker we get past these political volatile points, the quicker we can get down to the fundamentals that are turning the rand favourable.— George Glynos, ETM Analytics
Listen to Glynos explaining why the rand has always been a particularly fragile currency and what can be done to improve its volatility below:.
This article first appeared on 702 : How much do the Zuma - Gordhan battles affect the volatile rand?