Rand edges lower, extending heavy drop

The rand edged lower early on Tuesday, extending a heavy fall from last week when sentiment towards the risk-sensitive currency slumped.

At 0640 GMT, the rand traded at 15.72 against the dollar, around 0.2% weaker than its previous close.

The rand’s steep decline was triggered by factors including severe power cuts by state utility Eskom, deadly floods in an economically significant province and comments by the US Federal Reserve which suggested an aggressive rate hike outlook.

Read: Load shedding all but a certainty until these things happen …

Analysts had been warning that the South African currency – which some investors use as a proxy for commodities exposure – looked overvalued.

The government’s benchmark 2030 bond was also slightly weaker in early deals on Tuesday, with the yield rising 1 basis point to 9.920%.