By 11.15am, the rand spiked to R14.51 to the U.S. currency, a 16-month low after reports that Treasury official Michael Sachs, a deputy director general who headed up the budget office, quit last week after Zuma revealed his estimated R40-billion plan for free higher education.
Fin24 reported it had obtained independent confirmation from two sources close to Treasury that Sachs had resigned as the issue of free higher education was steamrolled by Zuma.
"Michael didn't necessarily oppose the idea of free education, but he wouldn't stand for the interference in the budget process," a source told the news wire.
"Fears that President Zuma is set to announce free higher education will continue to weigh, particularly as almost every broadsheet in the country read the story on the front page over the weekend," RMB currency strategist John Cairns told Fin24.
President Jacob Zuma's plan to announce free higher education generated panic among senior officials in Treasury including threats of resignations, the Sunday Times reported.
The president reportedly planned to reveal a R40-billion free higher education plan on Tuesday last week but was stopped in his tracks by senior officials in Treasury warning it would spur an economic crisis.
The Sunday Times revealed Zuma wanted to institute free higher education as early as February this year but was stopped by shocked Treasury officials.
It emerged this week that Zuma has been pushing for fully subsidised higher education for students from families with a combined income of no more than R350,000 a year. This despite a warning from an interministerial committee headed by Minister in the Presidency Jeff Radebe that the economy would not cope with the plan, according to Business Day.
Cutting social grants, freezing the rollout of RDP houses and increasing taxes are some of the steps government is reportedly considering to find the money to fund free higher education, according to the Mail & Guardian on Friday.