Mon. Dec 16th, 2019

Mboweni vs Magashule: Tito slams Ace’s “reckless statements” as Rand tanks

Tito Mboweni Ace Magashule Rand valueAnother day, another war within the ANC. This time, Tito Mboweni and Ace Magashule are going at it, after the latter’s comments sent the Rand tumbling.

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As it stands, we’ve seen Berlin in the 1980s look more united than the ANC are at the moment. Two of the party’s most high-ranking officials have gone toe-to-toe with each other this week, following the ANC’s three-day lekgotla in Pretoria. Ace Magashule revealed some of the resolutions from the meeting, but Tito Mboweni isn’t happy.

As well as detailing how the ANC planned to stimulate the jobs market, Ace also went down a more dangerous path, revealing a few concerning financial strategies on the government’s radar: Not only did he suggest that the ruling party wants to extend the mandate of the SA Reserve Bank, but he also confirmed “quantitative easing” was on the table.

Mboweni, Magashule square off: What is quantative easing?

It’s the fancy term that refers to a government printing more money, in order to deal with an economic crisis. However, this move has the potential to create inflation and send the currency into meltdown. See Zimbabwe.

The mere suggestion of this move has boiled Tito Mboweni’s blood, and he’s not been afraid to go public with his feelings. During a speech at Constitution Hill on Wednesday, he blasted Magashule for making “reckless statements”:

Current Dollar to Rand exchange rate for Wednesday 5 June

In case you were wondering how well these whispers have been received internationally, Mboweni also stated that he’s received calls from abroad asking “what were you guys smoking this weekend?” – the domestic market isn’t happy, either.

The Rand’s performance in the past 24 hours has been eye-opening. Which is perhaps the least alarming thing we can say about it. On Tuesday afternoon, shortly after Magashule had concluded his speech, ZAR lost more than 30 cents to the US Dollar by the close of business.

On Wednesday morning, Google Finance shows that the market opened at $1 : R14.79, one of the highest exchange rates we’ve seen in 2019. Compared to its value of R14.42 on Tuesday, the past 24 hours saw the Rand plummet by more than 2.5% against its American counterpart.

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Photo: Google Finance

However, shortly after midday, ZAR had clawed 10 cents back against the Dollar. The markets reacted positively to the finance minister’s robust opposition to the alleged plans. As of 13:00 on Wednesday, the current Dollar to Rand exchange rate stands at $1 : R14.69.

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