Is the Rand telling the truth? If so, Zuma is toast. Hope springs.

By Alec Hogg

It is difficult to understand the Rand’s incredible strength over the past few days. Yesterday was another example where, after gaining 1.2% on Tuesday, the currency weakened overnight to touch R17.10 against the Sterling. But it soon steamed ahead to a gain of 40c, up another 1% on the day to R16.70.

An employee holds South African Rand notes in this arranged photograph in London, U.K. Photographer: Jason Alden/Bloomberg

All of the news in the public arena, from geopolitics and economic realities to looming ratings downgrades, suggests the currency should be galloping in the other direction. So what do forex markets know which the rest of us don’t?

There are only two rational explanations. One is the SA Reserve Bank is bolstering the currency to offset the knock when that second downgrade shoe drops. The other is that someone knows Zuma will fall soon, triggering the end of his destructive network of patronage.

Take your pick. Given the level of trust in the Zuma Administration, it’s pretty obvious which of the two that 85% of South Africans are pulling for.

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