JOHANNESBURG (Reuters) -The South African rand weakened on Monday amid subdued risk-taking as investors sought safety due to fears about global growth, while power cuts on the domestic front clouded the economic growth outlook.
At 1525 GMT, the rand traded at 16.2046 against the dollar, around 0.32% weaker than its previous close.
Investors have flocked to the safe-haven U.S. dollar on concerns about the U.S. Federal Reserve’s ability to dampen inflation without causing a recession, along with worries about slowing growth arising from the Ukraine crisis and the economic effects of China’s zero-COVID-19 policy.
“The rand is likely to remain vulnerable to weakness this quarter,” Investec’s chief economist, Annabel Bishop.
For the rand, which is largely driven by international factors, the outcome of substantially weaker U.S. indicators on economic activity could, along with moderations in U.S. inflation, add some strength, although this could take a few months, she added.
At home, state power utility Eskom said on Monday it was implementing a Stage 4 power cut in the evening, a more serious cut than the previously indicated Stage 3, meaning a larger part of the country will experience rolling blackouts.
Market attention this week is also on a monetary policy decision by the South African Reserve Bank that will be announced on Thursday.
A Reuters poll published on Friday forecast the bank would make its first 50 basis-point repo rate hike in more than six years, taking it to 4.75%, to prevent potential second-round effects from higher consumer prices.
Shares on the Johannesburg Stock Exchange (JSE) strengthened on Monday on the back of stronger commodity prices, even as most global stock indexes fell including in the United States.
The FTSE/JSE all-share index ended up 0.82% at 69,212 and the blue-chip index of top-40 companies closed up 0.81% at 62,496 points.
In fixed income, the yield on the benchmark 2030 government bond was down 1.5 basis points at 10.0000%.
(Reporting by Olivia Kumwenda-Mtambo and Promit Mukherjee in JohannesburgEditing by Philippa Fletcher and Matthew Lewis)
