The rand slid on Monday after ratings agency Moody’s flagged risks from crippling power cuts and as the dollar advanced on investor bets that the US Federal Reserve would keep monetary policy tight for longer.
At 12.10pm, the rand traded at R18.0050 against the US dollar, about 0.6% weaker than its closing level on Friday and breaking above R18/$ for the first time since November last year.
On Friday, Moody’s said in an issuer comment on South Africa: “The blackouts’ effect on businesses, consumer sentiment and investment will weaken the country’s already subdued economic growth prospects and threaten social and political stability.”
There have been scheduled electricity outages on every day this year, after a record number of days with outages in 2022.
Last week, President Cyril Ramaphosa declared a national state of disaster over the power shortages, giving the government additional powers including permitting emergency procurement procedures.
US inflation
The dollar was up 0.1% against a basket of global currencies on Monday, with market attention firmly pinned on Tuesday’s US consumer price report and its implications for the Fed’s interest rate trajectory.
No major South African economic data releases were due on Monday, but South Africa’s latest consumer price report is due on Wednesday when retail sales figures will also be published. — (c) 2023 Reuters
