Rand flat as markets shrug off president’s speech

Rand was little changed on Friday after President Cyril Ramaphosa’s declaration of a “state of disaster” to tackle crippling power shortages in the country failed to elicit investor confidence.

Analysts said the president’s response to the crisis did not impress them, with no clear end in sight to the hours of daily power cuts that have hurt businesses across all sectors and hammered economic growth.

At 09:03, the rand traded at R17.81 to the dollar.

The government’s benchmark 2030 bond was weaker in early deals, with the yield up 5.5 basis points at 9.815%.

“Too little, too late is a saying that best encapsulates the market reaction,” said ETM Analytics in a research note.

“No relief rally followed as there was no confidence in the government’s abilities.”

Ramaphosa said the country would use disaster legislation, which it invoked during the Covid-19 pandemic, to help end power cuts, although it was not clear exactly what this would entail.

Declaring a national state of disaster gives the government additional powers to respond to a crisis, including by permitting emergency procurement procedures with fewer bureaucratic delays and less oversight.

Ramaphosa also said he would appoint a minister of electricity within the presidency, and that the government would increase existing social grants to cushion the poor against rising inflation.