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Rand nears weakest point in two years as load shedding continues
The Rand traded at R18.46 against the US dollar on Monday, reaching the lowest point it's even been since 2020.
The Rand was at its weakest point in April 2020, trading at 19.26 to the Dollar. Photo: iStock
The US dollar made gains on Tuesday as the Rand weakened to its lowest point in two years, with load shedding being one of the driving factors.
As per XE, a Euronet Partner, the Rand closed at R18.40 to the dollar on Monday, 25 October.
Rand to US Dollar
Back in September, Dynamic Outcomes’ Alex Paynter said three factors hampered Rand’s recovery:
- Growing global tensions as the war in Ukraine rages on.
- Load shedding and ongoing breakdowns as Eskom mitigated losses in generation capacity.
- Interest rate hikes as several international banks remained in the spotlight.
Ukraine war
Back in July, PwC said Russia’s invasion of Ukraine was a “key international factor driving global financial markets”.
In its South Africa Economic Outlook Updated Macro Scenarios for 2022-2023 report, PwC said: “The outlook on the disruption in Central and Eastern Europe is key to the outlook on financial markets and the Rand”.
On Tuesday, German Chancellor, Olaf Scholz, said rebuilding Ukraine is now a generational task, and also an opportunity to modernise the country’s infrastructure.
Watch: Ukraine’s generational task
Load shedding
Eskom is currently alternating between stage 3 and stage 4 load shedding – the current schedule will remain in place until 5am on Monday.
This after the embattled power utility said emergency generation reserves were almost depleted.
As such, “higher load shedding stages are required to help build up the emergency generation reserves during the week”.
Meanwhile, The Citizen’s Lunga Simelane spoke to energy specialist Lungile Mashele, who said Eskom’s ‘hazard approach’ was a major issue.
Interest rate hikes
Economic research group, Oxford Economics Africa said inflation was projected to average 6.8% in 2020, compared to 4.5% in 2021.
Other factors include the recent Transnet strike, as well as the ongoing Public Servants Association wage negotiations.
The Mineral Council for South Africa has estimated that bulk mineral exporters were losing R815 million worth of exports per day.
The Rand was at its weakest point in April 2020, trading at 19.26 to the Dollar.
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