Could the Phala Phala investigations affect the ZAR?

The current sitting President of South Africa Cyril Ramaphosa is under criminal investigation for the illegal possession of foreign currency at his farm in …. Opposition parties are pressing forward for the impeachment of the president however the issue is still under investigation. Whichever result occurs from this investigation will likely cause volatility in the ZAR pairs because this concern South Africa's future economy as the President may be impeached. Today we will look at the reason why Cyril Ramaphosa is under investigation and how to take advantage of the resulting volatility from the investigation's conclusion

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Why is the President Under Investigation？

About two years ago, the Presidents farm residence, The Phala Phala residence, was broken into and thieves stole $4 million dollars in cash found stashed in the house. The issue is that it is illegal for a person to hold such a large sum of foreign currency on them This money was not officially declared by the President so there is bound to be tax fraud also involved in the matter. Inquiries have been made on the matter to the appropriate bodies such as the South African Reserve Bank and the Police Department, however, no information has been brought forth since the inquiry two months ago. Another issue is that the whole ordeal was covered up for two years, as only now the issue has been made known to the public. Opposition parties such as the EFF have made it their mission to get to the bottom of this investigation and have Cyril Ramaphosa impeached.

What does this mean for the ZAR？

Currently, we cannot make a conclusion on the investigation as the Police and the South African Reserve Bank have not released the information they have on the matter but we can speculate as to what this could mean if the investigation were to prove him guilty, and he is impeached. The gravity of the news would surely cause volatility in markets as the political instability which will be caused by this impeachment in South Africa will surely have an impact on the ZAR markets

S we have to watch the news for any leads on the investigation. This will not only be just temporary volatility. The next elections are next year, if the current ruling party were to lose their prime candidate they are sure to lose government to opposition parties such as The EFF. These parties have wilding differing philosophies concerning economic reform and hence this change in leadership is also lightly to have a volatile impact on the economy and in turn on the Zar.

At this point, we USDZAR traders should start preparing ourselves for some market volatility by following the information which will be released concerning the investigation. The South African Police and South African Bank are set to release statements and information regarding the incident and so we should keep a close watch on what they release.