South Africa’s new finance minister, Pravin Gordhan, reassured investors Monday morning, as the rand currency strengthened the most since October 2008 against the dollar. Gordhan, who was appointed late Sunday, said he would strive to keep Pretoria’s investment grade rating following days of market turmoil, according to Reuters.
“We take account of the concerns of the rating agencies and investors and we shall endeavor to protect the investment grade rating of South Africa,” Gordhan, 66, reportedly told a televised news conference Monday.
Gordhan, a widely respected Indian-origin politician as well as a trained pharmacist, is the third finance minister to be appointed within a week — and it’s his second stint in the job. He replaced a little-known lawmaker, David van Rooyen, who had held the post only since Thursday. South African President Jacob Zuma appointed Rooyen after firing the previous finance minister, Nhlanhla Nene, who had held the post for about 18 months. The move provoked outrage, sending the rand to record lows and bond yields to the highest in seven years.
Gordhan served as South Africa’s finance minister from 2009 to May 2014, during which he was credited for steering the economy through a recession. Gordhan was then moved to the cooperative governance ministry, which oversees local governments, and he was replaced by his deputy at the time, Nene. With Gordhan now back in the finance ministry, Van Rooyen will become the cooperative governance minister, according to Bloomberg.
Although his appointment has already restored some market confidence, Gordhan has the tough task of reviving Africa’s most industrialized economy and the second-largest on the continent. Unemployment in South Africa currently sits above 25 percent, with economic growth slowing and credit rating agency Fitch recently downgrading the country to one level above “junk,” BBC Newsreported.
South Africa’s economy narrowly avoided a recession in the third quarter, posting 0.7 percent annualized growth compared with the previous quarter when it shrank 1.3 percent. Gross domestic product is forecast by the central bank to expand 1.4 percent this year, which would be the slowest pace since the 2009 recession.