The South African rand gained on Tuesday after Finance Minister Pravin Gordhan dismissed rumors that started over the weekend that he could be arrested by the country’s anti-corruption police unit.
Gordhan is being investigated by the elite police unit, known as the Hawks, for his role in the creation of a covert surveillance unit in the revenue services during his time as head of the agency.
Rumors of a possible arrest of the minister emerged over the weekend with local dailies picking it up and causing the struggling local currency to weaken further against major global currencies.
The Rand, one of the worst performers this year among the 31 currency tracked by Bloomberg, fell 1.6 percent on Monday after markets opened for the week.
The unit however recovered its losses on Tuesday after Gordhan said in a statement that weekend reports of his arrest were “extremely distressing”, and that he could not believe that he was being investigated or possibly charged for something he was innocent of, Eye Witness News reported.
“It is indeed true that no one is above the law. But no one should be subjected to the manipulation of the law and agencies for ulterior motives,” Gordhan said.
Reports of Gordhan’s arrest were also dismissed as being “totally incorrect” by the National Prosecuting Authority (NPA) head, Shaun Abrahams on Monday.
Traders said the rand’s rebound from Monday’s lows was also partly due to technical factors and mixed data from the US.
The South African currency has depreciated considerably against major currencies since last year as investors shy away from Africa’s third largest economy (i was overtaken by Egypt last week).
Falling metal prices, a slowdown in the Chinese economy and political scandals that have rocked the country in recent months are partly to blame for the weakening of the local currency.
The rand’s recent decline started in December, after Zuma fired then Finance Minister, Nhlanhla Nene, a period now remembered as the nation’s ‘9-12’ when the rand slid dramatically.
The debacles involving Gordhan have made it nearly impossible for him to implement austerity measures that he announced a February budget reading.