The South African rand has strengthened against the US dollar after President Cyril Ramaphosa announced his new coalition cabinet [f8d36b78]. The rand is trading at 18.0150 against the dollar, 1% stronger than its previous close [f8d36b78]. Ramaphosa's African National Congress (ANC) lost its majority in a recent election and has formed a unity government with former rivals [f8d36b78]. The new 32-member cabinet includes ministers from seven different parties [f8d36b78].
This development comes after the South African rand experienced volatility in the wake of the country's elections and the uncertainty surrounding the formation of the new government [acc2757b]. However, the rand has since reversed losses and is now trading higher against the US dollar, driven by hopes of a business-friendly coalition [3107b9d8]. Investors are optimistic about a more responsible and productive alliance between the ANC and the Democratic Alliance (DA) [3107b9d8].
The outcome of the elections raised concerns among businesses in South Africa due to the uncertainty surrounding the formation of the new government [acc2757b]. The country's economy has been hindered by corruption and administrative inefficiencies, which have impacted its growth [acc2757b].
In addition to the election uncertainty, the South African Reserve Bank (SARB) is set to announce its latest monetary policy decision, which will likely impact the rand's future performance [06793c51]. The rand's recent volatility can be attributed to a combination of domestic and global factors, including the election uncertainty and the SARB's rate decision [06793c51] [acc2757b].
Despite the challenges, the South African economy has shown mixed indicators. Mining production contracted by 5.8% in March compared to the previous year, while real retail trade sales exceeded economists' expectations by increasing 2.3% in March [ceb6fd02]. The country's official unemployment rate also rose to 32.9% in the first quarter [ceb6fd02].
The recent strengthening of the rand can also be attributed to global factors, such as the weakening of the US dollar and gains in metal prices [eea939ee]. The rand gained 1.4% due to the weaker dollar and hopes of a coalition deal between the Democratic Alliance (DA) and the ANC [41f0d52e].
In conclusion, the South African rand has strengthened as President Cyril Ramaphosa announced his new coalition cabinet. The formation of a unity government and the inclusion of ministers from seven different parties have buoyed investor sentiment. However, the rand's performance continues to be influenced by domestic and global factors, as well as the outcome of the South African Reserve Bank's monetary policy decision. The country's economy still faces challenges, including mining production contraction and high unemployment rates.