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Rand weakens on power cuts, stocks rise

At 1504 GMT, the rand traded at 14.4475 per dollar, 0.4% weaker than its New York close on Friday.

Picture: Supplied

JOHANNESBURG - South Africa’s rand weakened on Monday after power utility Eskom said it would carry out more power cuts this week as it struggles with capacity shortages, weighing on investor sentiment.

At 1504 GMT, the rand traded at 14.4475 per dollar, 0.4% weaker than its New York close on Friday.

Eskom said it would continue to implement rolling blackouts on Monday and Tuesday with 4,000 megawatts to be cut from the grid on a rotational basis, locally known as ‘load shedding’.

“Eskom’s ongoing and extended load-shedding schedule will likely continue to weigh on possible prospects of an economic recovery,” Nedbank analysts said in a note.

Analysts say power cuts, which have happened in several rounds since June last year, are one of the reasons why business confidence has slumped in recent months.

The economy grew by just 0.8% last year, insufficient to meaningfully reduce poverty or South Africa’s high unemployment rate of 27%.

Currency traders were now looking for further direction from South Africa’s February consumer price inflation data on Wednesday and the US Federal Reserve’s interest rate decision due later this week.

In fixed income, the yield on the benchmark government bond maturing in 2026 rose 2.5 basis points to 8.695%.

Stocks meanwhile rose, with the Johannesburg Stock Exchange’s top-40 index closing 1.42% higher, at 50,388 points. The broader all-share index rose 1.3% to 56,769 points.

The biggest winner on the bourse was South African retailer Steinhoff, which has lost 216 billion rand in market value since December 2017 when it disclosed a large hole in its accounts in what would become the country’s biggest corporate scandal.

It rose more than 7% on Monday, the first trading session after it published long-awaited details of a probe by PwC into the fraud at the company, which the auditor found totalled $7.4 billion.

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