JOHANNESBURG (Reuters) -South Africa's rand slipped on Friday as fears the governing African National Congress (ANC) could form a coalition with radical parties following this week's election roiled markets.
At 0833 GMT, the rand traded at 18.8575 against the dollar, 0.5% weaker than its previous close.
The rand went into a tailspin on Thursday, weakening as much as 1.8% at one point, after partial results indicated the ANC falling well short of a majority, the first time this has happened in 30 years of democracy.
Analysts attributed the local currency's weakness to the uncertainty that a coalition government could bring.
"Fears the ANC could join up with either the non-investor-friendly EFF party or the surprise package, the MK party, are weighing on the currency," said Andre Cilliers, currency strategist at TreasuryONE.
With results in from 57.3% of polling stations, the ANC had 41.9% of votes, a precipitous drop from the 57.5% of votes it secured in the national election in 2019. The main opposition Democratic Alliance was at 23.3%.
Former President Jacob Zuma backed uMkhonto we Sizwe (MK), was at 11.3% after overtaking the radical left Economic Freedom Fighters (EFF), which garnered 9.5%.
"(ANC's) vote share is at the lower end of expectations, an outcome that may stiffen the challenge of forming the country's first ever national coalition," said David Faulkner, an economist at HSBC.
The uncertainty impacted the government bond market, with prices of the country's main internationally traded bonds down as much as 1.3 cents on the US dollar in which they, like in many other developing countries, are denominated. The falls were the third in a row and left the bonds at their lowest level in almost a month.
South Africa's benchmark 2030 government bond fell, with the yield up 10.5 basis points to 10.685%.
(Reporting by Bhargav Acharya, additional reporting by Marc Jones in London, Editing by Sriraj Kalluvila and Sharon Singleton)
By Bhargav Acharya
