JOHANNESBURG (Reuters) – The rand remained on the back foot against the dollar on Wednesday after weakening to 1-week lows overnight, as investors fretted about the impact of South Africa’s electricity shortage on economic growth.
At 0636 GMT, the rand traded at 11.5800 per dollar, within a whisker of Tuesday’s close of 11.5855.
It had fallen to 11.6100 in the previous session, its weakest level since Jan. 20 according to Thomson Reuters data, weighed down in large part by power utilityEskom’s warning that the national grid remained under severe strain.
Eskom, which supplies about 95 percent of South Africa’s power, was forced to implement controlled outages – referred to as “load shedding” – for the second day in a row on Tuesday to avoid triggering a total collapse of the national grid.
“The rand has been hurt by negative sentiment and the adverse GDP implications surrounding Eskom’s latest round of load shedding,” Barclays Africa said in a statement.
Markets were also waiting for the U.S. Federal Reserve’s statement due later on Wednesday for pointers on the timing of policy tightening in the world’s biggest economy.
Government bonds edged higher on Wednesday, and the yield on the benchmark maturing 2026 eased 3 basis points to 7.17 percent.
