With South Africans learning to live with the current cycle of stage 6 load shedding, many believe the ongoing power cuts to be the antagonist behind the weak rand. However, treasury experts say the power outages are only a small contributor to a far greater picture.
Reuters reported that the rand hit a 20-month low in trade on Tuesday touching R16.60 against the dollar amid fears of a looming global recession. And on Wednesday, the local unit continued to soften against the greenback.
“Yesterday saw a rush into the safety of the dollar as heightened recession concerns panicked investors across all markets,” said TreasuryONE in a brief note. “The local currency is getting into the oversold territory but is at the mercy of the moves in international markets,” it said. “We need to wait for the US nonfarm payroll data on Friday and see if the USD continues on its merry run. As they say, the trend is your friend, but after 8 days of trading in the same direction, perhaps a bit of a relief rally could be on the cards in the short term,” said Andre Botha, senior dealer at TreasuryONE.
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