South Africa’s currency tanks—again—as the finance minister faces fraud charges

Quartz africa
Quartz africa

South Africa’s currency is once again sinking after Finance Minister Pravin Gordhan was served with a summons Oct. 11 over fraud charges and ordered to appear in a Pretoria court Nov. 2.

Prosecutors allege that Gordhan and two of his former colleagues from the South African Revenue Service committed fraud when Gordhan granted early retirement to one of the colleagues, then later allowed him to return to work. Gordhan faces a count of fraud and another for the unlawful extension of the former commissioner’s contract.

South Africa’s currency, the rand, immediately fell by as much as 3.4%. The rand traded at 14.24 rand to $1 during the announcement of the summons, after a previous day’s close of 13.91 rand to $1. Yields on government bonds due in 2026 increased 23 basis points to 8.93%, according to Bloomberg.

Gordhan questioned the intention behind issuing a summons just 15 days before he is to deliver his medium term budget speech in a struggling economy. The rift between President Jacob Zuma and Gordhan is said to be behind the finance minister’s legal trouble. The prosecutor, Shaun Abrahams, assured reporters that he was acting objectively.

“What is it about this country, and some in this country [politicians and those in the law], who choose these times to do these things?” Gordhan asked, according to the Business Day newspaper. “Where are they [the elite policing unit know as the Hawks] getting their instructions from and for what purpose?”

In February, police investigators demanded that Gordhan answer questions just days before he was to deliver a crucial budget speech. In May, the rand tanked after rumors of Gordhan’s arrest over allegations of espionage and corruption carried out by a “rogue unit,” while he was head of the South African Revenue Service nearly a decade ago.

And again in August, the currency weakened significantly on the news that Gordhan yet again faced arrest over the same allegations. In the face of mounting political pressure, Gordhan warned earlier this year he would not be surprised if he were removed by October.

Sign up for the Quartz Africa Weekly Brief — the most important and interesting news from across the continent, in your inbox.

home our picks popular latest obsessions search