The rand, already under pressure on a rise in global risk aversion, slipped further against major currencies in noon trade on Monday after the Supreme Court of Appeal overturned an earlier decision which means that ANC leader Jacob Zuma could still face charges of corruption, fraud, racketeering and tax evasion.

However, traders said it was merely a "knee-jerk" reaction by the rand and that the local currency had since stabilised.

At 12pm the rand was bid at 9.9235 to the dollar from an overnight close of 9.8020. It was bid at 13.2612 to the euro from a previous 13.1787 and at 14.8232 against sterling from 14.7621 before.

The euro was bid at US$1.3361 from US$1.3461 overnight.

"The rand was already under pressure before the Zuma announcement, but it did weaken further in a knee-jerk reaction. However, it has since stabilised again. But we will have to wait and see what the foreign reaction to the announcement is," a local currency trader said.

Standard Chartered Bank economist Razia Khan said although the ruling demonstrates the strength of South Africa's institutions, the decision also introduces more uncertainty into the political outlook.

"Protest against the decision from grassroots supporters of Jacob Zuma is probable. The knee-jerk reaction of markets has therefore been negative. Investors fear that a renewed focus on politicking will divert attention from the all-important reassurance they seek that economic policy will not change in a meaningful way under the new leadership. Those reassurances are now likely to take a secondary role, as the battle for grassroots support intensifies.

"The key question facing South Africa in 2009," Khan added, "is whether political developments - with the emergence of a rival party to the ANC - will favour a move back to the centre, or whether policy will be more susceptible to populism, as the need to reinforce the dominance of the ruling party takes priority."

Bonds lose ground on rand; eye Zuma

Bonds weakened a little during the morning session on Monday as the rand softened a tad in the wake of a Jacob Zuma court ruling and on generally poor global sentiment.

By 11.48am the short-term government R153 bond was bid at 7.535 percent from its previous close of 7.470 percent. The medium-term R157 was at 7.555 percent from a previous 7.495 percent, while the long-term R186 was bid at 7.630 percent from 7.520 percent.

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