---
title: "SA markets give GNU a thumbs up as rand rallies toward R18/dlr"
description: "South Africa’s markets rallied on Tuesday as the formation of a government of national unity, which excludes the radical EFF and MK parties, has allayed political jitters — for now."
type: "NewsArticle"
publisher: "Daily Maverick"
site: "https://www.dailymaverick.co.za"
section: "GNU DAWN"
author: "Ed Stoddard"
author_url: "https://www.dailymaverick.co.za/author/ed-stoddard/"
canonical_url: "https://www.dailymaverick.co.za/article/2024-06-18-sa-markets-give-gnu-a-thumbs-up-as-rand-rallies-toward-r18-dlr/"
published: "2024-06-18T14:43:53"
lang: "en-ZA"
word_count: 373
---

# SA markets give GNU a thumbs up as rand rallies toward R18/dlr

> South Africa’s markets rallied on Tuesday as the formation of a government of national unity, which excludes the radical EFF and MK parties, has allayed political jitters — for now.

By Ed Stoddard · Published 18 June 2024, 16:43 SAST

## Key points
- As South African markets bask in the glow of a new government of national unity, the rand, JSE, and bond markets soar, sparking optimism about much-needed reforms - but will this exuberance stand the test of time or fizzle out like a damp squib?
- South African markets rally on optimism over new government of national unity (GNU)
- Rand strengthens to near best levels of 2024, reaching R18.10/dlr
- JSE-AllShare index up 2.75%, 10-year government bond yield at lowest levels since March
- Euphoric market moves prompt questions on sustainability, but mood remains upbeat

## Content

Will the exuberance prove irrational or short-lived?

Across the asset classes, South African markets rallied on Tuesday as investors cheered the incoming government of national unity (GNU). The rand, the JSE and bond markets all put in big gains, underscoring optimism about the political centre holding and with it the hope of badly needed reforms.

The rand raced to its near its best levels so far in 2024, reaching R18.10/dlr from R18.29 in early trade, opening up a clear path to test the waters below 18/dlr. Its strongest 2024 level, reached on 21 May, was R18.03/dlr according to Reuters’ data, and it is now within spitting distance of that.

“The domestic currency saw volatility around South Africa’s elections on investor uncertainty, but has now strengthened towards R18.00/dlr as the establishment of a new government has proceeded peacefully and successfully,” said Investec Chief Economist Annabel Bishop.

“The formation of the GNU has proceeded peacefully, giving the domestic currency a strengthening momentum.”

This view was echoed by other market watchers.

“Following a momentous week in the domestic political landscape last week amid formation of a new government of national unity (GNU), the rand begins the public holiday-shortened trading week on firm footing amid dissipating political uncertainty,” RMB Markets Research said in a note to clients.

The mood spread to equities and bonds.

In early afternoon trade on Tuesday, the JSE-AllShare index was 2.75% higher, while the yield on the 10-year government bond extended recent gains, bringing its yield down to 10.157%, its lowest levels since March. A bond's price and yield are inversely related.

Returning to the rand, the currency has been long viewed as undervalued by analysts, with potential political risk stemming from the 29 May elections baked into its price.

**Read more in Daily Maverick:**[Zuma slams GNU as ‘white-led unholy alliance’ as MK party decides to join Progressive Caucus](https://www.dailymaverick.co.za/article/2024-06-16-zuma-slams-gnu-as-white-led-unholy-alliance-joins-progressive-caucus/)

The brightening political outlook — with radical parties such as the Economic Freedom Fighters and disgraced former president Jacob Zuma’s uMkhonto Wesizwe (MK) party out of the governing picture — seems to have triggered an unwinding of such positions.

Today's market moves may in hindsight be seen as euphoric. But for now, the mood is upbeat. **DM**

[Media on Daily Maverick: "Election results question"](https://www.dailymaverick.co.za/article/2024-06-18-sa-markets-give-gnu-a-thumbs-up-as-rand-rallies-toward-r18-dlr/)