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JOHANNESBURG. — The South African rand firmed in afternoon trade yesterday as power utility Eskom suspended its latest power cuts, with market focus also fixed on US inflation data due later in the week that could unleash bets on faster interest rate hikes there.
At 4:45pm, the rand traded at 15,4100 against the dollar, 0,48 percent firmer than Monday’s close.
South Africa’s state-owned utility Eskom suspended scheduled power cuts yesterday, which were implemented after it suffered more breakdowns at its ailing coal fleet.
Eskom’s woes are a major constraint on economic growth and investor sentiment in Africa’s most industrialised nation.
Focus was also on US inflation after stunningly strong US labour data last week drew extra attention to inflation, forecast to hit a four-decade high of 7,3 percent in January in Thursday’s data release, in the lead up to March’s Federal Reserve meeting.
“Should this come to fruition or exceed the forecast, significant dollar appreciation could threaten much of the rand’s 2022 gains as hawkish Fed bets increase,” said DailyFX analyst Warren Venketas.
Locally, attention will soon shift to President Cyril Ramaphosa’s annual State of the Nation Address in parliament on Thursday, a speech he typically uses to announce reforms in key policy areas.
The government’s benchmark 2030 bond also firmed, with the yield falling 2 basis points to 9,34 percent.
Stocks rose too.
The Johannesburg Stock Exchange’s Top-40 Index closed 0,48 percent higher at 69 527 points while the broader All-Share Index rose 0,54 percent to 76,091 points.
Financial firms, which tend to benefit when the rand is stronger, were among the biggest winners of the day, with insurer Old Mutual topping the blue-chip index with a 3,6 percent rise. — Reuters.
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