Controversy surrounding Gordhan proving to be quite profitable
Recalling Gordhan seemed to have removed any illegality in the first instance and offered a gold plate guarantee on the second.
South African Finance Minister Pravin Gordhan has filed court papers with details on the Gupta family’s alleged suspicious banking transactions. Picture: AFP
Financial reports would tend to suggest that the turmoil surrounding the now axed finance minister, Pravin Gordhan, has proved extremely profitable to a fair number of currency speculators.
Though the reports leaned towards individual speculators rather than institutional action, there was little sentiment in the global pursuit of money and, if there is a continued, concerted run on the rand, the big investors will be left with little option but to join in.
All reports on Thursday night suggested that this has now happened, and will continue to crush the currency in days ahead.
What has occasioned the initial rush to take profit out of this country’s adversity is the practice of “shorting” – selling securities that are not physically owned at the prevailing rate and then purchasing them at a discount when the price plummets.
It is, as any investment analyst will tell you, an extremely risky position to hold; it must also be added that most institutional investors regard it as being simply part of the overall spread and they engineer overall strategies for the longer haul rather than for quick dip profits.
The major exceptions occur when information is leaked in illegal inside trades, or the gamble the speculator takes is seen as something nearing a certainty.
We would suggest that recalling Gordhan removed any illegality in the first instance and offered a gold plate guarantee on the second.
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