The South African rand traded weaker against the US dollar as the African National Congress (ANC) and the Democratic Alliance (DA) failed to reach an agreement on the Gauteng Government of Provincial Unity.
The DA wants a power sharing provincial Cabinet, which the ANC is unwilling to give. Talks were deadlocked on Tuesday evening.
The rand ended nearly 1.6% weaker yesterday as there are already signs that the Government of National Unity (GNU) may face significant obstacles, as the two main parties, the African National Congress and the Democratic Alliance, struggle to find common ground.
This is according to Andre Cilliers, Currency Strategist at TreasuryONE.
Cilliers said that the rand is trading unchanged at R18.60 this morning despite a softer dollar.
Data from Anchor Capital showed that 5.30am the US dollar is trading marginally lower against the rand at R18.60.
The local currency was trading marginally higher at R19.98 against the euro, while the British pound has marginally gained against the rand to trade at R23.59.
At 10.45am, the rand was trading at R18.49 against the dollar. The SA currency was trading at 19.89 against the euro, while the rand was at R23.47 against the pound.
Problems with unity talks
On Tuesday, the DA and the ANC struggled to reach agreement on the allocation of positions in the Gauteng Legislature as provincial government of unity talks between the two political parties reached a breaking point.
Following the deadlock in talks between the two parties, the DA said that they were still open to negotiations as long as the ANC treats and approaches them with respect.
According to DA Federal Chairperson, Helen Zille, they want the ANC to accept the compromise that composition of the Gauteng Legislature will have five MEC positions for the ANC, four for the DA and one position for the IFP.
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