Pravin Gordhan returns as new Finance Minister: South Africa’s banking index goes high

South African President Jacob Zuma has decided to reappoint Pravin Gordhan as Financial Minister after removing David van Rooyen from the position. Gordhan will take over this position again which he had held previously for five years. Following this, shares in South Africa's banking index surged to 15 percent.

In a report by BBC, the move came with the widespread concern over South Africa's struggling economy.

Gordhan's re-appointment set the currency high from over 16 rand to the dollar to about 15 according to a site xe.com.

According to the Guardian, there was a loss of 169.6 billion rand between Thursday and Friday. Head of research at Nedbank Capital, Mohammed Nalla said that, "Critics would say having a finance minister serving only two days doesn't bode well for the reputation of South Africa." He also added that, "International investors are probably thinking: why didn't the president make a much more considered decision in the first place?"

Zuma had fired Nhlanhla Nene as Financial Minister last week on 9^th of December and replaced him with David van Rooyen. With this replacement last week, there was a significant drop in Rand. Post this, Zuma, after serious consideration, brought back Gordhan to the National Treasury.

Bloomberg reported that, the increase of Africas Bank Index was the biggest jump since September 2011. There was a 15 percent gain in life assurers as well. Barclays Africa Group Ltd. increased to around 21 percent and FirstRand Ltd. rose to as much as 22 percent. Insurer Sanlam Ltd. surged to 23 percent.

According to the e-mailed statement by Johannesburg based organization to Bloomberg, "The Banking Association South Africa commends President Zuma for listening to the public and recognizing the impact of removing Minister Nene." Adding to the statement, "We call on Minister Gordhan to move speedily to rebuild confidence and assure investors that we will continue on the path of fiscal discipline."

Next year, South Africa is gearing for its local elections, the African National Congress is expected to face stubborn competition from the Democratic Alliance. Gordhan's appointment gave Africa's most advanced economy its third financial minister in less than a week.