The South African rand is crashing after reports the finance minister might be arrested.
The rand is down by 1.6% at 15.6623 per dollar, its lowest level since mid-March, as of 9:44 a.m. ET. It dropped by as much as 2.1% to 15.7275 minutes earlier.
This follows reports that Finance Minister Pravin Gordhan is set to be arrested over “alleged irregularities at the nation’s revenue service,” according to Bloomberg.
Although, a Reuters report noted that President Jacob Zuma’s office denied that the minister would be arrested on Sunday.
“Due to a combination of weak fundamentals and rising political risk, the South African rand has underperformed this year. This should continue as both of these drivers are likely to intensify in the coming weeks,” argued Marc Chandler, the global head of currency strategy at Brown Brothers Harriman, in a note to clients.
Notably, this isn’t the first shake up with finance ministers in South Africa.
Back in December, the struggling economy saw three finance ministers within a week as Zuma fired his well-respected finance minister, Nhlanhla Nene, out of nowhere, replaced him with an unknown former mayor – and then fired the new guy and replaced him with Pravin Gordhan.
All of this political chaos comes at a time when the country continues to struggle with ongoing economic problems.
Even the one sort of decent data point, manufacturing PMI, might not actually be that good, according to analysts.
“As such, social tensions are likely to remain high ahead of municipal elections in August. While support for the ANC is likely to dip further then, the ANC should retain its grip on power. President Zuma’s second and final term doesn’t end until 2019, and he has so far proven impervious to various scandals,” added Chandler.