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S. Africa rand strengthens as govt talks progress

STORY: The South African rand was stronger in early trade on Thursday (June 13) as talks to form a government of national unity progressed.

On Wednesday (June 12), South Africa's Inkatha Freedom Party said it will join a unity government with the African National Congress and the Democratic Alliance.

That's after voters punished the ANC in last month's election, taking away the parliamentary majority it had held for thirty years.

The final composition of the government has not yet been announced.

However, the comments by IFP leader Velenkosini Hlabisa gave the most precise picture yet of how negotiations are shaping up.

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"The IFP will join a government of national unity that includes the ANC and the Democratic Alliance... We will participate in the government of national unity for the sake of our country and for the sake of our people who want life to continue with a stable government that will address their challenges."

Markets favor a coalition that involves the pro-business Democratic Alliance.

However, many ANC supporters are opposed to partnering with a party that has struggled to shed its image as a defender of white privilege.

Analysts have speculated that including the IFP, a conservative party with an ethnic Zulu base, could help temper those concerns.

Parties are in a race against time to secure a deal before the newly elected parliament sits on Friday (June 14).

Early on Thursday, the rand was trading at 18.35 against the dollar, around 0.2% stronger than its previous close.