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JOHANNESBURG – South Africa’s rand weakened against the dollar on Wednesday, struggling for momentum as a nationwide power crisis disrupted supplies to businesses and households, rattling sentiment.
Investor focus also remained intact on South Africa’s November consumer price inflation numbers and October retail sales data, both due later in the day.
At 0625 GMT, the rand traded at 14.8090 per dollar, 0.13% weaker than its New York close on Tuesday.
South Africa’s loss-making utility Eskom, which generates more than 90% of the country’s power, implemented rotational power cuts for seven straight days on Wednesday after flash flooding strained the firm’s already-creaking coal plants.
Power cuts have disrupted supplies to businesses and households across the country, a further blow to the South Africa’s already slowing economy.
South Africa’s gross domestic product (GDP) in the third quarter shrank 0.6%, the second contraction this year, as mining, manufacturing and agriculture were hit hard by a combination of low demand and the uncertainty around power supply.
Beyond domestic catalysts, traders were also focusing on the U.S. Federal Reserve’s policy meeting and whether U.S. President Donald Trump will impose tariffs on nearly $160 billion worth of Chinese consumer goods from Dec. 15.
“Traders remain cautious of taking large positions ahead of the US FOMC meeting,” analysts at NKC African Economics wrote in a note.
Economic uncertainty stemming from the U.S.-China trade war has prompted the U.S. Federal Reserve to cut interest rates thrice this year, but it is almost unanimously expected to leave interest rates unchanged on Wednesday.
South Africa is highly susceptible to global investor sentiment volatility as the country depends on foreign money to cover its large budget and current account deficits.
In fixed income, the yield on the benchmark government paper due in 2026 was flat at 8.425%. – Reuters Africa
Online Reporter