The South African rand is getting destroyed.
The currency is down by 3.5% at 14.2964 per dollar as of 7:40 a.m. ET.
The rand’s plunge follows reports that prosecutors issued South Africa’s Finance Minister Pravin Gordhan with a formal summons to appear in court on fraud charges in November.
“The National Prosecuting Authority denies that charges – which date back to Mr. Gordhan’s 1999-2009 stint as head of the South African Revenue Service – are politically motivated. But today’s announcement will undoubtedly be seen by many as an attempt by President Jacob Zuma to remove one of the few ministers who has provided a check on the power of the controversial president,” wrote John Ashbourne, Capital Economics’ Africa economist, in a note.
Notably, this isn’t the first shake-up. Back in December 2015, South Africa saw three finance ministers within a week as Zuma fired his well-respected finance minister, Nhlanhla Nene, out of nowhere, replaced him with an unknown former mayor — and then fired the new guy and replaced him with Pravin Gordhan.
“Today’s events suggest that struggle for power within the ANC may continue to throw up turbulence for South Africa’s already weak economy,” added Ashbourne. “This latest self-inflicted crisis comes at a tense time for South Africa.”
As for the rest of the world, here’s the scoreboard as of 7:27 a.m. ET:
- The Russian ruble is weaker by 0.7% at 62.4414 per dollar as Brent crude oil prices trickle down by 1.2% to $52.48 per barrel amid some all-over-the-place comments. Igor Sechin, the president and chairman of the Russian state oil company Rosneft, said his company would not cut or freeze oil production as part of any agreement with OPEC. Meanwhile energy minister Alexander Novak said Russia’s only thinking about a freeze. But on Monday, president Vladimir Putin said, “Russia is ready to join the joint measures to cap production and is calling for other oil exporters to join.”
- The British pound is falling by 0.8% at 1.2265 against the dollar, hitting a fresh 31-year low against the dollar in early trade. The currency fell below 1.23 for the first time since 1985.
- The euro is down by 0.5% at 1.1079 against the dollar after the latest ZEW Indicator of Economic Sentiment for Germany rose to 6.2 in October, compared with the previous reading of 0.5.
- The Japanese yen is down by 0.2% at 103.84 per dollar.
- The US dollar index is up by 0.5% at 97.43.