Rand set for its worst week since February’s power cuts

The rand continued its fall on Friday afternoon, set for its worst week since the country was hit by a week of blackouts in February.

The local currency broke through R15/$ on Thursday as conflicting statements from the ANC about the mandate of the Reserve Bank fuelled speculation around political uncertainty. On Tuesday, ANC secretary-general Ace Magashule said the party wanted to expand the role of the Bank to include job creation, and to explore the use of quantitative easing.

President Cyril Ramaphosa said on Thursday, however, the mandate of the Reserve Bank would not be altered. Ramaphosa spoke out on the matter after finance minister Tito Mboweni and the ANC’s head of economic transformation, Enoch Godongwana, also contradicted Magashule’s utterances.

“It basically cements the fact that there is infighting in the ANC. There are two factions [in the party] fighting an ongoing battle for control and that leads to instability and fear,” Herenya Capital Advisors co-founder Petri Redelinghuys said.

So far this week the rand had lost almost 3.3% against the dollar, its biggest weekly loss since mid-February, when Eskom implemented stage 4 power cuts due to generation shortages and diesel supply constraints, with the rand losing 3.3% that week. The power cuts had a severe effect on the mining and manufacturing sectors in the first quarter of 2019, with output falling 3.4% and 2.4%, respectively.