Written by Tanwar Anders
JOHANNESBURG (Reuters) – The South African rand fell sharply on Thursday after media reports of a major rift between the pro-business Democratic Alliance party and President Cyril Ramaphosa over ministerial positions.
At 1527 GMT, the rand was trading at 18.48 against the dollar, down 1.7% from its previous close.
The Democratic Alliance agreed to join Ramaphosa’s African National Congress in a national unity government after the ANC lost its parliamentary majority in last month’s elections.
The Democratic Alliance is expected to obtain ministerial positions in exchange for supporting Ramaphosa’s re-election as president. But News24 and Business Day reported that Ramaphosa had backed down on an offer to give the Democratic Alliance the Ministry of Trade, Industry and Competition.
News24 said the DA leadership has decided to tell Ramaphosa that if he does not adhere to the agreement reached this week, the “deal is off” between the two parties.
The two parties did not immediately respond to Reuters calls seeking comment.
Business Day said Ramaphosa backed down on the offer of the minister’s position after senior ANC officials claimed at a meeting on Wednesday that it would lead to the Democratic Alliance “pushing back economic redress tools”.
The NCP supports the relaxation of labor laws and the replacement of one of the ANC’s main policies to promote the participation of black South Africans in the economy.
Financial markets are witnessing a state of tension over the formation of the government, as it will give an indication about whether the ANC intends to share power meaningfully with parties including the Democratic Congress.
“Further delay in the government announcement will only multiply tensions and reinforce the impression that the national unity government is faltering at the first hurdle,” said Lou Neill, senior political analyst at Oxford Economics.
The top 40 indexes on the Johannesburg Stock Exchange closed 0.4% lower. Benchmark 2030 government bonds fell, with the yield rising 30 basis points to 10.125%.