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South Africa's Zuma recalls Gordhan from international roadshow, rand falls

South African president Jacob Zuma
Justin Sullivan | Getty Images
South African president Jacob Zuma

South African President Jacob Zuma has instructed Finance Minister Pravin Gordhan to return immediately from an investor roadshow to Britain and the United States, the presidency said on
Monday, without giving a reason for the decision.

The rand fell by as much as 1.7 percent against the U.S. dollar, bonds tumbled and banking shares slid more than 2 percent on the news.

Investors see Gordhan as a symbol of stability, given weak economic growth and ruling party tensions that have put South Africa's investment grade at risk.

Last year, fraud charges brought against Gordhan badly rattled financial markets and spurred accusations of a political "witch-hunt". They were dropped in October.

Financial markets were also shaken before Gordhan's budget speech last month by rumours that he might be moved from the Treasury in a cabinet reshuffle. Gordhan has said it is Zuma's prerogative to fire him if he sees fit.

"Zuma has instructed the Minister of Finance, Mr Pravin Gordhan, and Deputy Minister Mcebisi Jonas to cancel the international investment promotion roadshow to the United Kingdom and the United States and return to South Africa immediately," the president's office said in a statement.

Earlier a government source said: "The presidency did not give permission for the trip."

Uncertainy

Gordhan is in London on the first leg of a week-long non-deal investor roadshow. South African business executives and union leaders were also part of Gordhan's delegation.

Analysts said Zuma's move could spell another bout of political uncertainty and possibly a cabinet reshuffle.

"Any suggestion Zuma is interfering with Gordhan's business dealings will be a concern for investors and could signal political instability on the horizon," political analyst Daniel Silke said.

London-based Nomura emerging markets analyst Peter Attard Montalto concurred: "I believe today could be a test of the water to undertake a reshuffle."

South African media reports say Zuma has an uneasy relationship with Gordhan, though the president has denied suggestions that he is "at war" with the minister.

S&P Global Ratings and Fitch Ratings both rank the sovereign debt of Africa's most industrialised economy one level above junk, while Moody's puts it two notches higher.

Moody's, which put South Africa on negative watch in its latest review, is due to review that rating on April 7, followed by S&P at the beginning of June.

Gordhan first served as finance minister from 2009 to 2014. Zuma reappointed Gordhan in December 2015 after his decision to replace the respected Nhlanhla Nene as finance minister with a little-known politician triggered a steep selloff in South African assets.