Log in
E-mail
Password
Remember
Forgot password ?
Become a member for free
Sign up
Sign up
New member
Sign up for FREE
New customer
Discover our services
Settings
Settings
Dynamic quotes 
OFFON

MarketScreener Homepage  >  News  >  Economy & Forex  >  All News

News : Economy & Forex
Latest NewsCompaniesMarketsEconomy & ForexCommoditiesInterest RatesBusiness LeadersFinance ProfessionalsCalendarSectors 
All NewsEconomyCurrencies / ForexCryptocurrenciesEconomic EventsPress releases

South Africa power cuts hurt rand as they put economy under more pressure

share with twitter share with LinkedIn share with facebook
share via e-mail
0
11/09/2019 | 02:47am EST
A street money changer counts South African Rands in Harare

South Africa's rand weakened on Friday, after nationwide electricity blackouts overnight by ailing state utility Eskom spooked investors and reignited worries about the economy.

At 1500 GMT the rand had slipped 0.46% to 14.8100 to the dollar, compared to a close of 14.7460 in the previous session.

Power firm Eskom implemented stage 2 power cuts, or loadshedding, shaving off 2,000 megawatts from the national grid starting at 2000 GMT on Thursday evening until 0300 GMT on Friday.

The firm said it had lost three generation units, pushing its emergency reserve capacity to "critical levels".

Eskom added the risk of power cuts on Friday was high as the system remained severely constrained, and that loadshedding on Friday could not be ruled out.

The rand had rallied on Thursday to its firmest since before a bleak Oct. 30 budget, mainly on the back of renewed hopes of a U.S.-China trade deal that helped the currency shrug off a dip in business confidence and a contraction in manufacturing.

"Although the rand can sometimes perform well when growth is weak as import demand softens, history shows us that this is not the case when load-shedding hits," traders at ETM Analytics said in a note.

The latest bout of nationwide blackouts come after repeated power cuts in February and March, which dragged the economy into contraction and pushed the government to grant Eskom a $4 billion bailout on top of a $16 billion bailout spread over the next 10 years.

A firmer dollar buoyed by news that China and the United States had agreed to cancel some tariffs as part of a potential preliminary pact to end their trade war also put the rand under pressure.

On the stock market, the benchmark JSE Top-40 Index fell 1.61% to 50,398.87 points while the broader All-Share Index closed down 1.54% at 56,600.46 points.

"For the most part I would say there are external factors playing a part here," said Independent Securities trader Ryan Woods.

"Pretty much all the European indexes are softer today so we’re taking a bit of a breather," Woods added.

Gold mining companies fell to the bottom of the blue-chip index with Gold Fields down 6.31% and AngloGold Ashanti slipping 2.34% as a stronger dollar lead to weaker gold prices.

Dual listed Swiss jeweller Richemont also fell sharply, dropping 5.73% to 110.77 rand after announcing political protests in Hong Kong weighed on its first half sales and reporting higher than expected losses.

Bonds were also weaker, with the yield on the benchmark paper due in 2026 up 9 basis points to 8.48%.

($1 = 14.7634 rand)

(Reporting by Mfuneko Toyana and Naledi Mashishi; Editing by Alex Richardson and Susan Fenton)

Stocks mentioned in the article
ChangeLast1st jan.
EURO / SOUTH AFRICAN RAND (EUR/ZAR) -0.08% 16.2149 Delayed Quote.-0.38%
NATIONAL GRID PLC 1.39% 899 Delayed Quote.16.21%
US DOLLAR / SOUTH AFRICAN RAND (USD/ZAR) 0.27% 14.6995 Delayed Quote.3.12%
share with twitter share with LinkedIn share with facebook
share via e-mail
0
Latest news "Economy & Forex"
11:16aNEWS HIGHLIGHTS : Top Global Markets News of the Day
DJ
11:16aNEWS HIGHLIGHTS : Top Financial Services News of the Day
DJ
11:16aNEWS HIGHLIGHTS : Top Company News of the Day
DJ
11:15aKansas City Fed Manufacturing Index Logs Negative Reading for November
DJ
11:01aDeutsche Bank sues Madoff feeder funds for reneging on $1.6 billion claims sale
RE
11:01aItaly coalition divided over euro zone bailout fund reform
RE
10:57aSterling set for biggest daily drop in three weeks on weak survey data
RE
10:56aThe Best-Managed Companies of 2019 -- and How -2-
DJ
10:56aThe Best-Managed Companies of 2019 -- and How They Got That Way -- Journal Report
DJ
10:53aSouth African Airways inks deal to end eight-day strike
RE
Latest news "Economy & Forex"