South Africa’s business confidence climbed to its highest level in five months in July helped by a firmer currency, falling inflation and an increase in vehicle sales, a survey showed on Tuesday.
The South African Chamber of Commerce and Industry’s (SACCI) monthly business confidence index (BCI) accelerated to 95.3 in July from 94.9 in June, the highest level since February 2017.
The business group said the main contributors to the improvement were made by higher vehicle sales, more building plans passed, lower inflation and higher share prices.
The USD/ZAR immediately jumped higher to close to 13.40 and we expect it to keep grinding higher before rand stabilizes.
However the country’s currency, rand weakened nearly 1.5 percent on Tuesday evening after President Jacob Zuma survived a no confidence vote in parliament by secret ballot.
Markets reacted almost immediately and sending the unit near a one-month low.
At 1730 GMT the rand had weakened 1.4 percent to 13.4050 per dollar, having traded as firm as 13.1525 in the session as some participants bought options in the currency to bag profits should the motion fail.
U.S.-listed shares of South African ETFs were down as much as one percent.
“The USD/ZAR immediately jumped higher to close to 13.40 and we expect it to keep grinding higher before rand stabilizes,” said head of emerging markets at TD Securities, Cristian Maggio.
“While Zuma’s position is becoming increasingly precarious, which could be rand positive going forward, we think it may be too early to look at potential rand appreciation now,” Maggio said.
Zuma survived a no-confidence motion against him in parliament on Tuesday by winning 198 votes to the opposition’s 177 votes as African National Congress lawmakers rallied to his support.