Rand slumps as Shaun Abrahams says Pravin Gordhan to face charges

The rand plunged the most in more than three months and bonds slumped after Finance Minister Pravin Gordhan said he had been summoned to appear in court and prosecutors said he would be charged.

The currency dropped as much as 3.4%, and traded 3.1% weaker at 14.2431 per dollar by 10.56am in Johannesburg. Yields on government bonds due December 2026 soared 23 basis points to 8.93%.

Gordhan confirmed police had delivered a summons to his home, and said his lawyers would release a statement shortly. EyeWitness News reported earlier that the finance minister would be charged with fraud relating to his time as head of the tax authority, the latest development in a battle that has pitted the finance minister against state-owned companies accused of mismanagement and corruption.

“It’s a grave concern and investors are unlikely to react kindly to this development,” Jana van Deventer, an analyst at ETM Analytics in Johannesburg, said by phone. “It’s a reminder to investors of the political instability that’s been playing out in South Africa, especially related to national treasury.”

The case was politically motivated, and South Africans needed to ask why it had been filed just weeks before the delivery of the mid-term budget, Gordhan said in a speech delivered in Midrand near Johannesburg on Tuesday. – Bloomberg

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