South African rand drops on reported discord over cabinet posts By Reuters

By Tannur Anders

JOHANNESBURG (Reuters) -The South African rand fell sharply on Thursday after media reports of a major disagreement between the pro-business Democratic Alliance (DA) party and President Cyril Ramaphosa over cabinet posts.

At 1527 GMT, the rand traded at 18.48 against the dollar, 1.7% weaker than its previous close.

The DA agreed to join Ramaphosa’s African National Congress (ANC) in a government of national unity after the ANC lost its parliamentary majority in an election last month.

The DA is expected to get cabinet positions in return for supporting Ramaphosa’s re-election as president. But the News24 website and the Business Day newspaper reported that Ramaphosa had backtracked on an offer to give the DA the trade, industry and competition ministry.

News24 said the DA’s leadership had decided to tell Ramaphosa that if he did not stick to the agreement struck this week then “the deal is off” between the two parties.

Both parties did not immediately respond to Reuters calls seeking comment.

Business Day said Ramaphosa retracted the offer of the ministry position after top ANC officials argued at a meeting on Wednesday that it would result in the DA “pushing back levers of economic redress”.

The DA supports loosening labour laws and replacing one of the ANC’s key policies to boost the participation of Black South Africans in the economy.

Financial markets are on edge over the composition of the cabinet, as it will give an indication of whether the ANC intends to share power meaningfully with parties including the DA.

“Further delays to the cabinet announcement will only cause jitters to multiply and feed the impression that the GNU (government of national unity) is stumbling at the first hurdle,” Louw Nel, senior political analyst at Oxford Economics, said.

The Johannesburg Stock Exchange’s Top-40 index closed down 0.4%. The benchmark 2030 government bond slumped, as the yield rose 30 basis points to 10.125%.