South Africa’s President Zuma dumps respected finance minister, sending rand to record low

South African President Jacob Zuma has removed Finance Minister Nhlanhla Nene from his position, sending the country's currency to a record low.

Nene's dismissal comes on the heels of a credit rating downgrade to just one notch above sub-investment grade by Fitch last Friday. South Africa's economy is barely growing, squeezed by low commodity prices globally and the near certainty of an interest rate rise in the United States next week.

Since his appointment in mid-2014 Nene has emphasised the need to cap government spending, reign in bailouts to state-owned firms, and limit the size of wage increases to government employees.

Government spending on public sector wages and welfare, accounting for the largest slice of government expenditure, has long been seen as the ruling African National Congress’ chosen method to stay in power as it looses popular support.

The currency shed close to 5.0 per cent to its lowest level ever at US$0.067 (HK$0.52), with analysts expecting it to fall even further as investors digest the news.

“The concern is the suddenness of the move,” Nalla said. “Why redeploy a finance minister that was well received and well respected by the investor community,” said head of research at Nedbank, Mohammed Nalla.