South African rand weakens as power cuts, weak data weigh

South African Rand coins are seen in this photo illustration, file. REUTERS/Mike Hutchings/File Photo

JOHANNESBURG (Reuters) – South Africa’s rand weakened against the dollar early on Friday as disappointing local factors like power cuts and weak data outweighed upbeat global sentiment buoyed by easing Middle East tensions.

By 0618 GMT, the rand traded at 14.2050 per dollar, 0.20% weaker than its previous close.

State utility Eskom scaled back power cuts on Friday after bringing some generating units back online, but reiterated that the system remained vulnerable due to breakdowns.

Power cuts have been a roadblock in President Cyril Ramaphosa’s efforts to lift economic growth.

Data showed on Thursday manufacturing output fell 3.6% year-on-year in November after contracting by 0.8% in October.

Manufacturing was one of the sectors hit hard by low demand and the uncertainty over power supply in the third quarter of 2019, when gross domestic product (GDP) shrank 0.6%.

“Domestic data failed to provide a basis for optimism,” NKC African Economics said, commenting on the rand’s performance.

“Recent manufacturing and upcoming mining data may be a precursor to a dismal Q4 GDP reading.”

In fixed income, the yield on the benchmark government bond due in 2026 was flat at 8.24%.

Reporting by Olivia Kumwenda-Mtambo; editing by Uttaresh.V

Source link

Spread the love

Leave a Reply

Your email address will not be published. Required fields are marked *