Rand recoups losses; firmer dollar, power crisis weigh

The rand clawed back on Tuesday, after domestic power cuts and a stronger US dollar in the previous session pulled down the currency to its weakest level so far this year.

As of 0610 GMT, the rand traded at R16.14 against the dollar, 0.46% firmer than its previous close, despite the dollar holding ground near a 20-year high.

A stronger dollar makes high-yielding but riskier assets such as the rand less attractive to investors.

The rand hit R16.26 per dollar on Monday on the back of a stronger dollar and as power utility Eskom resumed rotational power outages.

The outages are a major brake on economic growth.

“The next major resistance level in the rand is now around the R16.34 level, and a break below R16.05 would provide the catalyst for a recovery towards R15.75,” analysts at Nedbank said in a note.

Government bonds also recovered, with the yield on the benchmark 2030 instrument down 2.5 basis points at 10.18%.

Source: moneyweb.co.za