Reuters
South Africa’s rand fell against the dollar in early trade on Wednesday
as risk appetite waned on news of Iranian missile strikes on bases
hosting US troops in Iraq, stoking fears of a broader conflict in the
Middle East.
Power cuts in South Africa due to problems at state-run utility Eskom
also weighed on the rand. The utility implemented rotational power cuts -
locally known as “load shedding”- overnight until early morning on
Wednesday because of a shortage of generating capacity.
At 0640 GMT, the rand traded at 14.3480 per dollar, 0.23 per cent weaker than its previous close.
“Markets were given a jolt by news of Iran firing rockets at U.S. bases
in Iraq and we saw an immediate risk-off reaction,” said Andre Botha,
senior dealer at TreasuryONE.
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“We
can expect ongoing volatility throughout the day as investors await
further developments. Load shedding overnight is not helping rand
sentiment at present.”
Struggling Eskom, which generates more than 90 per cent of South
Africa’s power, is widely viewed as the biggest impediment to growth.
Saddled with unreliable coal-fired power stations, Eskom has struggled
to meet demand since 2007, forcing it into several rounds of extensive
power cuts. Outages last year dented economic output and shook investor
confidence in President Cyril Ramaphosa’s administration.
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