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South African rand slips on weaker precious metals, power cuts

10/27/2021 | 11:23am EST
Photo illustration of South African bank notes displayed next to the American dollar notes in Johannesburg

JOHANNESBURG (Reuters) -South Africa's rand slipped more than 1% on Wednesday, hit by subdued precious metals prices and deeper power cuts by state utility Eskom.

At 1505 GMT, the rand traded at 15.0300 against the dollar, 1.23% weaker than its previous close.

Spot gold, platinum and palladium all slipped as strong tech earnings prompted some investors to opt for riskier assets.

Precious metals count among the South Africa's major exports,

"Weaker metal prices continue to weigh on the domestic currency, although an escalation (in) loadshedding is further souring investor sentiment," IG senior market analyst Shaun Murison said, referring to the country's rolling power blackouts.

Eskom regularly implements outages because of faults at its ailing coal fleet, which has held back economic growth. It ramped up scheduled power cuts from midday on Wednesday.

The outages increased from "Stage 2" to "Stage 4," requiring up to 4,000 megawatts (MW) to be shed from the national grid, until 5 a.m. (0300 GMT) on Friday.

Lower precious metal prices also dragged the Johannesburg Stock Exchange (JSE) lower. The JSE's Top-40 Index dipped 0.25% to 60,874 points and the broader All-Share Index lost 0.21% to 67,475 points.

Gold and platinum stocks were the biggest losers of the day, while some firms that benefit from a weaker rand rose.

Blue Label Telecoms, which majority owns South Africa's fourth-largest mobile operator Cell C, closed up 0.46% after Cell C swung back to a first-half profit from a $513 million loss last year.

The government's 2030 bond was slightly weaker, with the yield rising 0.5 basis points to 9.515%.

(Reporting by Olivia Kumwenda-Mtambo; Editing by Kirsten Donovan)

ę Reuters 2021
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