Loadshedding worries sink South African rand to 3-year low.


Concerns over the effect of frequent blackouts known as loadshedding this winter drove the South African rand to a three-year low on Wednesday, after a spectacular drop the day before.

At 15:30 GMT, the rand fell to 18.8750 versus the dollar, its lowest level since early May 2020. On Tuesday, the rand fell by almost 1.7% in value.

South African dollar bonds decreased in value, with longer-term bonds losing the most. The 2052 maturity was trading at 82.8 cents per dollar, down 0.77 cents, at 15:05 GMT, after losing more than a penny during the day. The yield temporarily surpassed 9%, its highest level in over six months.

According to local media, South Africa’s troubled national utility Eskom warned lawmakers on Tuesday that bringing a generating unit back online will need a 45-day delay.

The delay is projected to compound the situation since the bulk of the country faces loadshedding for more than 10 hours each day throughout the winter.

“SA bonds and the ZAR (rand) are underperforming their EM counterparts,” ETM Analytics’ Kieran Siney noted in an email on Wednesday morning.

Despite the good profits on offer and the ZAR’s fundamental undervaluation, “the underperformance will persist until there is a concrete plan to resolve SA’s energy crisis that the market buys into.”

The benchmark 2030 bond yield rose 23 basis points to 10.560%, its most since December. Local government bonds have also fallen in value.

According to a second analysis issued on Wednesday morning by ETM Analytics, the market fall was prompted by erroneous articles on Tuesday that provided “the impression that was losing control of the grid.”

“South Africa is in trouble, the grid is under stress, and Eskom faces multiple threats,” says no one.

The benchmark index of Japan’s 40 biggest companies fell 0.17 percent, while the broader all-share index stayed flat.


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