Investors in South Africa had anticipated an election result in which the ruling African National Congress could govern handily in combination with a smaller party. However, estimates pointing to a major decline in ANC support have shaken those expectations and released a flood of uncertainty.
The rand fell as a model devised by a state research agency revealed that the ANC is on track to lose its parliamentary majority for the first time since coming to power at the end of apartheid 30 years ago.
The rand plummeted as much as 2%, trading at R18.7639 per dollar. It has since reduced the loss to 18.6003, its lowest point in three weeks. The yield on local-currency bonds maturing in 2035 increased by 8 basis points to 12.13% during early afternoon trade in Johannesburg.
The ANC is expected to win approximately 42% of the votes cast on Wednesday, according to forecasts from the Council for Scientific and Industrial Research, based on an extrapolation of early tallies published by the South African electoral commission. This compares to 57.5% in 2019.
South African markets rose in May on predictions that the next government will be led by the ANC and a market-friendly coalition partner, indicating policy consistency.
