Tannur Anders

JOHANNESBURG (Reuters) – South Africa’s rand fell sharply on Thursday following media reports of a major dispute between the pro-business Democratic Alliance (DA) party and President Cyril Ramaphosa over cabinet positions.

At 15:27 GMT, the rand was trading at 18.48 against the dollar, 1.7% weaker than its previous close.

The DA has agreed to join Ramaphosa’s African National Congress (ANC) in a national unity government after the ANC lost its parliamentary majority in last month’s election.

The DA is expected to take up cabinet positions in return for supporting Ramaphosa’s re-election as president. However, the News24 website and Business Day newspaper reported that Ramaphosa had withdrawn his offer to hand over the Ministry of Trade, Industry and Competition to the prosecutor.

News24 reported that the DA’s management had decided to tell Ramaphosa that if he did not honor the agreement reached this week, then “the contract would be null and void” between the two parties.

Both sides did not immediately respond to Reuters calls seeking comment.

Business Day said Ramaphosa withdrew the ministry offer after top ANC officials argued at a meeting on Wednesday that it would result in the DA “pulling back the economic levers”.

The DA supports loosening labor laws and replacing one of the ANC’s key policies to enhance the participation of Black South Africans in the economy.

Financial markets are tight-lipped about the makeup of the cabinet as it will indicate whether the ANC intends to meaningfully share power with parties including the DA.

“Further delays in the government announcement will only increase anxiety and fuel the perception that the GNU (government of national unity) is stumbling at the first hurdle,” said Louw Nel, senior policy analyst at Oxford Economics.

The Johannesburg Stock Exchange’s Top-40 Index fell 0.4%. The benchmark 2030 government bond fell, with the yield rising 30 basis points to 10.125%.