Old Mutual share price drops due to devaluation of South African rand

 
Caitlin Morrison
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The departure of Pravin Gordhan has sent the rand tumbling (Source: Getty)

Insurer Old Mutual is the biggest loser in the FTSE 100 this morning, with shares down 6.2 per cent - because of the recent devaluation in the South African rand.

The rand has declined by more than nine per cent over the past week after finance minister Pravin Gordhan was sacked by Jacob Zuma during a cabinet reshuffle.

As of this morning, one pound can buy around 16.63 rand, compared with 15.44 at the beginning of the week.

The reason the decline in South Africa's currency has had such an impact on Old Mutual's share price is due to the insurance group's exposures in the country.

Old Mutual was founded in South Africa, and still has a lot of holdings there.

Last year, the group divided itself into four separate companies. One of those businesses, Nedbank, is a major player in the South African banking sector.

During Gordhan's tenure as finance minister he was subject to some controversy, when he was charged with fraud over the hiring of a former colleague as a consultant in 2016.

However, those charges were dropped after only a few days, an event that caused the rand to surge.

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