With the announcement that Cyril Ramaphosa won the ANC leadership race at the party's 54th National Conference, South Africa's rand rallied to a nine-month high to under R12.60 to the US dollar.
But, not only did the markets erupt in cheer, so too did crowds from the Nasrec centre in Johannesburg where the conference occurred. Ramaphosa looked far more jubilant than his opponent Nkosazana Dlamini-Zuma, the ex-wife of President Jacob Zuma.
Delegates sang and danced as they as they bided their time until the announcement of the official result was made at around 19:00, even after rumours of a possible recount.
TreasuryOne dealer, Wichard Cilliers, said, "Cyril has won but the NDZ camp is unhappy with the result," after telling Fin24 that the rand remained strong at R12.60/$ despite the rumour of a recount.
It was a close call, but the deputy president received a total of 2 440 votes, while Dlamini-Zuma, the former African Union chairperson, received 2 261 votes. Meaning there was a difference of only 179 votes between the two candidates. This lifted the roof as the announcement was made.
For the past month, the rand has been strengthening, partly due to sentiment that Ramaphosa is seen by many as more business-friendly than Dlamini-Zuma.
Since former finance minister Pravin Gordhan and his deputy Mcebisi Jonas were axed, the rand went from trading as strong as R12.31/$ to a low of over R16/$. With the news of Ramaphosa now in the top spot, the rand was over 4% firmer than its overnight close on Friday, trading at R12.54/$ shorty after the announcement.
Early predictions of the markets by TreasuryOne dealer, Gerard van der Westhuizen, that Ramaphosa winning would be seen as a positive sign could see the ZAR trade stronger, heading towards R12.50/$.
He said, "We have seen the market starting to price in a Ramaphosa win since early Friday and therefore a victory for Dlamini-Zuma could hit the ZAR hard and run up past 14.00 is a big possibility."
Lesiba Mothata, an economist at Alexander Forbes, said that the announcement of Ramaphosa's election win would help the rand gain even further.
"There has been a political premium in the rand and SA bonds. The news of Cyril's election means he is well placed to turn the economy around," he said.
His calculations of a fair market stand the rand trades at around R12.50 to the dollar.
"When the political noise gets removed from the market – and bonds are stronger as rate increases are likely to continue from here and rating downgrades are likely to slow – the rand should go even better than R12.50," said Mothata.
Although the rand has strengthened over sentiment, economist Mike Schüssler suspects that, while the rand has strengthened quite a lot, it has probably over-reacted. He thinks the rand "will pull back again over the next few days and weaken against the dollar and other currencies... as people realise it was not a clear-cut victory.
"The rand over-compensated for a Ramaphosa victory and investors will see a much weaker rand if we do not solve economic problems quickly in next few months."
Watch the two videos below. The first, a reaction from the crowd and tears from Ramaphosa; the second, the reaction from Jacob Zuma himself...