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Rand trades weaker against the dollar after Eskom’s gloomy power outlook

The rand was weaker early on Wednesday, a day after state utility Eskom painted a bleak picture about the country's power outlook. Photo: Reuters

The rand was weaker early on Wednesday, a day after state utility Eskom painted a bleak picture about the country's power outlook. Photo: Reuters

Published Nov 10, 2021

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The rand traded weaker early on Wednesday, a day after state utility Eskom painted a bleak picture about the country’s power outlook.

At 06.55 GMT, the rand traded at 15.0950 against the US dollar, down around 0.3 percent on its previous close.

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Eskom, which is currently implementing scheduled electricity cuts because of multiple faults in its coal fleet, said on Tuesday the risk of outages would remain until another 4 000 to 6 000 megawatts of capacity is added to the grid.

That could take years if the current sluggish pace of power procurement continues.

Africa’s most industrialised nation has experienced recurring power cuts for more than a decade that have constrained economic growth.

“Eskom's failure to resolve the growing power supply problems and the impact on the South African economy is beginning to take its toll on the currency,” Andre Cilliers, currency strategist at TreasuryONE, said in a note.

Investors were also cautious ahead of American inflation data later on Wednesday and South Africa’s mid-term budget on Thursday.

Economists polled by Reuters are expecting the National Treasury to announce that this year’s consolidated budget deficit will roughly halve, following healthy corporate tax collections.

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The government’s benchmark 2030 bond was slightly weaker in early deals on Wednesday, with the yield rising 1 basis point to 9.295 percent.

REUTERS

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