Nhlanhla Nene has been dropped from South Africa’s cabinet twice in three years – and his misfortunes have been the catalyst that turned one of the biggest rand bears into one of the biggest bulls.

As the currency declined this week amid speculation that Nene would resign as finance minister, Nomura International recommended a long-rand position versus the dollar, entering the trade at 14.85 and targeting a move to the “lower 13s” over six months. That compares with a median forecast of 15.14 in a Bloomberg survey of 24 analysts, and would place Nomura among the four most bullish forecasters.
That’s a turnaround from January 2016, when Nomura predicted the rand would slump to 19 per dollar, from around 16, after then-President Jacob Zuma had unexpectedly fired Nene as finance minister the previous month. That compared with the 15.30 median call of 32 analysts in a Bloomberg survey at the time, and would have positioned Nomura as the most bearish among them.

While Nomura described Nene’s axing in December 2015 as a bigger “shock” to the rand than the 2008 financial crisis, his ousting this time round would have “minimal” effect on markets, and could even be positive as a signal that the government won’t tolerate corruption, strategists including Henrik Gullberg wrote in a note on Tuesday. In addition, a sustained trade surplus and hawkish central bank would support the rand, they said.
“The trade balance has improved significantly on the back of the sell-off in the rand when Nene was first dismissed, which made the rand very competitive,” Gullberg said on Wednesday. “Nene having to go despite not being found guilty of wrongdoing” is a sign that tolerance of corruption “is much lower than it was in the past,” he said.

Nomura’s view is at odds with others including Societe Generale, Morgan Stanley and Deutsche Bank, which have recommended shorting the rand. But it’s already reaping the reward: after President Cyril Ramaphosa replaced Nene as finance minister with former central bank Governor Tito Mboweni on Tuesday, the rand strengthened 1.9 percent. The currency strengthened 0.5 percent to 14.6920 per dollar at 9 a.m. in Johannesburg on Thursday.

The rand declined 25 percent against the dollar in 2015, trading at a record low in December after Zuma fired Nene. This year, it’s down 16 percent, buffeted by headwinds including rising U.S. rates and dollar strength, and crises in Turkey and Argentina. But the worst is probably over, according to Gullberg, provided Moody’s Investors Service holds the country’s credit rating at investment level in an assessment scheduled for Friday.

“That will provide a further boost to the rand, the external environment permitting,” he said.