Rand Falls for Second Day After Zuma Survives No-Confidence Vote

• Rand Falls for Second Day After Zuma Survives No-Confidence Vote

The South African rand fell for a second day against the dollar after President Jacob Zuma survived a no-confidence vote that could have brought an end to his administration.

The currency was the second-worst performer among major peers after Tuesday’s motion — held by a secret ballot — was defeated by 198 votes to 177. For Commerzbank AG, the result is unlikely to be a trigger for excessive currency weakness as it was largely priced in beforehand.

The vote “can hardly be expected to be a ‘shocker’ for any market participant,” currency strategist Ulrich Leuchtmann wrote in a note to clients. Going forward, any policy mistakes “would have to be big to have any market impact – as everybody who currently holds long-ZAR positions should be prepared for some volatile political news flow,” he wrote.

The rand declined 0.4 percent to 13.4256 per dollar as of 8:40 a.m. London time after sliding 1.1 percent on Tuesday.

The rand’s one-month implied volatility — a gauge of expected swings in the currency — now stands above 15 percent, the highest among the global major exchange rates tracked by Bloomberg. The currency strengthened almost 13 percent last year after plunging a combined 57 percent in the five years earlier.

Under Zuma, who has led the country since May 2009, South Africa has slipped into recession and has seen unemployment rise to a 14-year high. The next Presidential vote is slated for 2019, for which Zuma may try to appoint a successor of his choice.