AEGiS-WSJ: South African Rand Gains Ground As Mbeki Focuses on AIDS Crisis

Important note: Information in this article was accurate in 2002. The state of the art may have changed since the publication date.

South African Rand Gains Ground As Mbeki Focuses on AIDS Crisis

Wall Street Journal - April 29, 2002
Robert Block, Staff Reporter of The Wall Street Journal

JOHANNESBURG, South Africa -- President Thabo Mbeki's U-turn on anti-AIDS drugs has been powerful medicine for the country's ailing currency, the rand.

One of the most-traded emerging-market currencies, the rand hit a four-and-a-half month high against the dollar on Friday, at 10.57 to the dollar. The currency has risen more than 28% from lows in late December of more than 13 rand to the dollar.

The sudden surge follows nearly two years of negative sentiment over the government's handling of the political turmoil in neighboring Zimbabwe and the South African AIDS crisis. Last year, the rand plunged an unprecedented 37% against the dollar.

But traders and analysts say the fact that Mr. Mbeki last week backed a government decision to provide anti-retroviral drugs to AIDS sufferers had helped restore confidence, paving the way for capital inflows.

Until now, Mr. Mbeki's government has been skeptical about anti-retroviral drugs. Although as many as five million South Africans are believed to be infected with HIV, the virus that causes AIDS, and the disease is thought to be the leading cause of death in the country, most doctors in state hospitals have been prevented from prescribing anti-retrovirals such as nevirapine, which sharply reduces the chance that infected mothers will pass HIV to newborn babies.

The sudden death of South Africa's Safety and Security Minister, Steve Tshwete, on Friday from complications following back surgery, might add negative pressure on the rand in trading Monday. Mr. Tshwete was a loyal aid to the president, and his death has prompted speculation that a cabinet reshuffle is inevitable.

Write to Robert Block at bobby.block@wsj.com
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