South Africa's rand and government bonds strengthened on Monday morning, as a meeting of the executive committee of the country's governing party kicked off to decide the fate of President Cyril Ramaphosa.
South Africa's governing African National Congress (ANC) party convened its National Executive Committee to discuss a panel report that found evidence Ramaphosa may have committed misconduct and violated the oath of his office.
At 0900 GMT, the rand traded at 17.20 against the U.S. dollar, 1.99% stronger than its previous close.
Investors have been on tenterhooks over developments surrounding the president, with the rand falling more than 4% on Thursday against the dollar, before recovering.
"We believe that the political landscape will probably remain turbulent in the final weeks of this year, weighing on investor sentiment towards South Africa and resulting in increased market volatility," said analysts at Nedbank in a research note.
Government bonds also rose, with the yield of the benchmark 2030 bond up 25 basis points to 10.555%.
South Africa's dollar-denominated bonds were up as much as 2 cents in the morning, with longer-dated issues rising more. The 2052 maturity was up 1.916 cents to 88.46 cents in the dollar at 0906 GMT, according to Tradeweb data.
"The conundrum for the ANC is that recent polls of its supporters show that President Ramaphosa remains its strongest drawcard for national elections in 1Q24," JP Morgan analysts said in a note to clients.
"While potential alternative ANC candidates do not differ substantially on policy direction, uncertainty over the effectiveness of policy and reform implementation would rise if there were to be a prolonged political vacuum."
Elsewhere, South African private sector activity recovered slightly in November, although output fell for a third straight month due to rolling power cuts and port strikes, the S&P Global South Africa PMI survey showed on Monday.
Meanwhile, the dollar index fell as a low as 104.1 as China's easing of some of its COVID-19 curbs boosted risk sentiment, before recovering to trade 0.01% higher at 104.48. (Reporting by Bhargav Acharya and Rachel Savage; Additional reporting by Susan Mathew in Bangalore; Editing by Savio D'Souza and Crispian Balmer)