Assets Tumble in South Africa as Zuma Dodges Calls to Step Down

• Assets Tumble in South Africa as Zuma Dodges Calls to Step Down

South African bonds and the rand fell after President Jacob Zuma was said to have bolstered his position by fending off calls from senior ruling party officials to quit.

South Africa’s benchmark rand bond due December 2026 reversed gains, with the yield rising 12 basis points to 9.03 percent as of 12:10 p.m. in Johannesburg. The rand fell 1.6 percent to 13.8361 per dollar, heading for its weakest closing level since Dec. 28, after strengthening as much as 1.2 percent earlier.

The reversals came after Zuma survived calls to resign by members of the African National Congress at a meeting of the party’s National Working Committee on Tuesday, according to two people with knowledge of the matter. The calls were sparked by Zuma’s decision to fire his finance minister and stack the cabinet with loyalists, which led to S&P Global Ratings cutting the nation’s credit assessment to junk on April 3.

“He seems to be surviving for now,” said Koon Chow, a strategist at Union Bancaire Privee Ubp SA in London. “The consequences are playing out. But there’s still hope that he will be recalled. If hope was completely crushed, the currency wouldn’t move by this modest amount. There’s still hope he’s overstepped the market and that the institutions will force him to step down early.”

The rand has dropped 10 percent from a year-to-date high on March 24 as investors speculated that Zuma may dismiss Finance Minister Pravin Gordhan, which he did on March 30, replacing him with Malusi Gigaba. The inability of Zuma’s critics within the ANC to force him to step aside heightens chances that an opposition-sponsored vote of no confidence in parliament will fail if it goes ahead.

Markets would view Zuma quitting early as a “blue sky moment,” Mary Curtis, chief South Africa equity strategist at RMB Morgan Stanley, said last week.