South Africa’s rand weakens as power cuts from state-owned power utility continue

PUBLISHED: Mon, 18 Mar 2019 11:30:40 GMT
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JOHANNESBURG (Reuters) – South Africa’s rand weakened slightly early on Monday as continued rolling power cuts from the state-owned power utility weighed on market sentiment ahead of local and international economic data due later in the week.

At 0628 GMT, the rand traded at 14.4375 versus the dollar, 0.33 percent weaker than its New York close on Friday.

Eskom said it would continue with planned power cuts on Monday and Tuesday after it stepped up rolling blackouts on Saturday, underscoring the risks to businesses in Africa’s most industrialised economy.

“The announcement by Eskom that load shedding will prevail throughout the weekend curtailed more decisive rand recovery as the supply-side constraint continues to dampen the outlook for the domestic economy and feeds into deteriorating business confidence,” said NKC African Economics in a morning note.

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The rand is expected to trade in a range of 14.30 rand to 14.50 rand on Monday.

The currency will await further direction from local inflation data and the U.S. Federal Reserve’s Reserve interest rate decision due later this week.

Government bonds weakened, with the yield on the benchmark instrument maturing in 2026 up 5 basis points to 8.720 percent.