Question NW1472 to the President of the Republic
12 July 2016 - NW1472
Maynier, Mr D to ask the President of the Republic
Whether, in light of the fact that the Public Investment Corporation lost R99 billion within 48 hours, as a result of his decision to remove the former Minister of Finance, Mr Nhlanhla M Nene, from office on 9 December 2015, he has subsequently found that his statement that the markets overreacted and people exaggerated the impact of his decision was an accurate reflection of the situation (details furnished); if not, why not; if so
Reply:
The currencies of countries that have international trade linkages are contagiously linked to both domestic and global temporal events. This is called incidence of speculative attacks. South Africa is not an exception. The analysis of the currency performance shows that the global and domestic events and shocks in the months from November and December 2015 were increasingly having an impact on the ZAR. These shocks included oils prices, figures from China, US interest rates; while at home the sovereign downgrading of South Africa in December and the changing of the Minister of Finance. The latter incident caused a spike in the Rand and within three days, the rand recovered back to the pre-9 December 2015 levels.
The PIC temporarily lost R99billion and regained it in the course of currency stabilization as is normal occurrence in speculative global and domestic attacks.
With government’s commitment to grow the economy by implementing the NDP the SA economy and markets continue to show resilience. Our efforts of galvanizing government, business, and labour, to work together to implement the 9 point plan and implement critical reforms, is proving to be a solution in fast-tracking growth in the economy.