Eskom is killing the rand

The rand tumbled on Thursday to its lowest level since October 2020 as electricity cuts and worries about a global recession renewed pressure on the currency.

At 5.02pm, the rand traded at R16.40/US$.

“The rand is down just over 1% against the US dollar today, continuing on after yesterday’s hawkish comments from US Fed chair Jerome Powell at the ECB Sintra Forum garnered support for the greenback,” said Warren Venketas, a DailyFX analyst.

“Coupled with Eskom and the extended rolling blackouts, the slump in commodities markets added to the upside move,” he added.

Eskom said it will continue power cuts on Thursday and Friday, citing a labour strike as the cause of the worst power cuts the country has seen in more than two years.

Statistics South Africa figures on Thursday showed May producer inflation quickened to 14.7% year on year from 13.1% in April. The country’s trade surplus widened to R28.4-billion rand in May, from a revised R16-billion in April. The May budget deficit widened to R17.1-billion rand from R5.4-billion rand a year earlier.  — Bhargav Acharya and Anait Miridzhanian, (c) 2022 Reuters