JOHANNESBURG (Reuters) – The rand rose in South Africa on Friday amid optimism that the Democratic Alliance and the African National Congress will reach an agreement on ministerial positions, a day after local media reported a major rift between the two parties.
At 1503 GMT, the rand reached 18.24 against the dollar, which is about 1.3% higher than its previous close. The currency fell sharply on Thursday after local media reports indicated that the agreement between the two parties was in danger.
A source in the Democratic Alliance Party close to the talks told Reuters on Friday that the party is still committed to negotiations over ministerial positions and that it is “not at the stage of drawing broad lines and presenting final ultimatums.”
The comments came after News24 and Business Day reported that the ANC had backed away from offering the DA the trade and industry portfolio, angering the DA.
The Inkatha Freedom Party, the third largest party in the national unity government, urged the ANC and the Democratic Alliance to quickly resolve the outstanding issues.
Financial markets are concerned about the formation of the new government, as it will give an early indication of how the ANC intends to share power after losing its parliamentary majority in elections last month.
“The continuation of negotiations is certainly welcome, as it indicates that both the ANC and the Democratic Alliance remain intent on making the national unity government more centrist,” said Danny Grieve, co-head of Africa at ETM Analytics.
It is still unclear when the government’s choices will be announced.
On the Johannesburg Stock Exchange, the Top-40 index of blue-chip stocks closed up about 1%. South Africa’s benchmark 2030 government bond performed stronger, with the yield falling 14 basis points to 9.985%.