South Africa’s rand plummeted as election projections revealed a significant drop in support for the ruling African National Congress (ANC), sparking concerns about potentially chaotic coalition negotiations and causing unease among investors.
The currency experienced a sharp decline of up to 1.7%, trading at 18.7287 per dollar as of 10:20 a.m. in Johannesburg.
Concurrently, the yield on local-currency bonds maturing in 2035 surged by 19 basis points to 12.24%, indicating a jittery response from the financial markets to the election developments.
According to Bloomberg Economics, the most favorable outcome for investors is one that ensures Ramaphosa remains in office, given his commitment to pro-growth policies.
Nevertheless, certain investors are wagering that this precise outcome will materialize, leading to a recent surge in the value of the country’s currency, the rand.
According to a Bloomberg survey of emerging-market specialists, the majority of respondents are either overweight or neutral on the country, indicating a prevailing optimism that South Africa will sidestep a post-election populist shift.