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Rand heads for more than 3% weekly loss on power crisis

After this week’s steep fall in the rand, Nedbank CIB analysts said they were more comfortable that risks to the currency were better priced.

Picture: Christa Eybers/EWN

JOHANNESBURG - The rand was on course for a loss of more than 3% against the dollar this week, as five consecutive days of power cuts reminded investors about the fragility of an economic recovery.

At 0620 GMT, the rand traded at R14.1500 versus the dollar, around 0.2% weaker than its previous close and more than 3.5% weaker than at the end of last week.

Struggling state power firm Eskom implemented one of the worst power cuts in several years from Sunday to Thursday, hurting small businesses without backup power generators and industrial firms that consume large volumes of power.

Eskom said power cuts were not likely on Friday, however, as its power plant performance had improved and it had made progress replenishing its water and diesel reserves.

Investors are waiting for more details on how President Cyril Ramaphosa’s government plans to shore up Eskom’s balance sheet - plans which should be unveiled during a budget speech by the finance minister on 20 February.

After this week’s steep fall in the rand, Nedbank CIB analysts said they were more comfortable that risks to the currency were better priced.

“South Africa’s fiscal position has come to the fore as the market anxiously awaits more details on Eskom and how the government will account for this in the budget,” Nedbank CIB analysts wrote in a research report.

Government bonds were flat on Friday, with the yield on the benchmark 2026 bond at 8.95%.

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