WHEN President Nelson Mandela sneezes, the South African currency market catches cold. For the second time in two weeks rumours that Mr Mandela was ill sent the rand into a sharp decline yesterday, underlining once again the importance of this erstwhile "communist terrorist" to South Africa's capitalist economy.
The rand, which had closed at 3.86 against the dollar in Johannesburg on Thursday, slumped at one point to 3.92 in yesterday's trading. Strong denials from Mr Mandela's office helped to firm the currency up by close of trade to 3.88 against the dollar (6.107 against the Irish pound).
Not only was Mr Mandela in fine health, a spokesman said, but he had just departed on an official visit to Swaziland and will fly on to Mali and Togo today.
The rumour which set off yesterday's selling was that Mr Mandel had booked a private room in an exclusive Johannesburg clinic. While he denied this, a presidential spokesman, Mr Parks Mankahlana, said the story could have had some basis in fact.
Mr Mandela usually received an anti malaria injection before travelling to malarial countries, and this could have given rise to the story, he said.
The last Mandela health scare occurred on February 15th, when the rand began tumbling after more than a year of stability. This scare was traced back to a casual observer at the British High Commission in Cape Town, who saw an ambulance racing into Mr Mandela's offices across the road.
It later transpired the ambulance was going to the aid of a bodyguard who had injured himself on the stairs.
Some dealers say, however, the connection between the stories about Mr Mandela's health and the rand's recent decline may not be a simple matter of cause and effect. For over a year the South African currency had held at around 3.65 to the dollar, a higher and steadier rate than many forecasters had predicted. South Africa's Central Reserve Bank has indicated it will allow the rand to find its own level, although it would probably be unhappy with a rate much below 3.85 to the dollar.
Some analysts believe the recent slump may be in the bank's interests. Both government and bank are committed to scrapping the last of the apartheid era exchange controls in the near future.
It would be better for them if the rand finds its true market value now rather than appearing to collapse with the demise of exchange controls.