Rand Pares Losses While Markets Await Some News On Eskom

The rand broke its three-day losing streak on Thursday morning, leading emerging-market currencies in gains while the market awaits some news on Eskom.

The local currency pared some losses on Thursday, strengthening to as much as R14.85/$ in intraday trade. The rand broke through R15/$ after Eskom implemented stage 2 load-shedding on Wednesday. The first power outage in several months added to investor concern about the troubled power utility.

The cabinet is expected to discuss the Integrated Resource Plan on Thursday; the plan lays out the government’s long-term plan to meet electricity demand. 

“Perhaps the announced blackouts will be a strong incentive for the government to urgently address prevailing issues at Eskom,” said Rabobank emerging-markets strategist Piotr Matys.

“It is absolutely critical that a comprehensive and credible restructuring plan is quickly implemented not only to avoid more blackouts, which undermine economic activity, but also to reduce the risk of SA being downgraded to junk by Moody’s Investors Service,” Matys said.

At 10.05am, the rand had firmed 0.62% to R14.8515/$ after closing at R14.9436 on Wednesday. It had strengthened 0.58% to R18.9942/£ and 0.93% to R16.4493/€. The euro was flat at $1.1076.

Gold was little changed at $1,488.9/oz while platinum was down 0.34% to $882.99. Brent crude was flat at $59.06 a barrel.

“Markets will also be keeping an eye on Eskom today, and any signal of continued load-shedding following yesterday’s surprise will add pressure to the local currency,” Peregrine Treasury Solutions treasury partner Bianca Botes said. 

On the global front, markets are awaiting manufacturing and industrial data from the US on Thursday to provide an indication of the health of the US economy.