(Reuters) -The South African rand fell against the dollar on Wednesday after struggling state electricity company Eskom warned that the power system would remain constrained and vulnerable to additional breakdowns.
At 1610 GMT, the rand traded at 16.2625 against the dollar, 1.07% weaker than its previous close.
The safe-haven dollar index ticked up around 0.4% to 104.900 after comments from Fed Chair Jerome Powell that the U.S.
central bank would not let the economy slip into a “higher inflation regime” even if it means raising interest rates to levels that put growth at risk.
South African company Eskom, which has implemented so-called “Stage 6” outages, said on Wednesday that the maintenance backlog could take weeks to clear.
“The worst power cuts in two years are yet another blow to industries attempting to restore operations after COVID lockdowns and weather-related disruptions,” RMB analyst Nema Ramkhelawan-Bhana said in a note.
On the Johannesburg Stock Exchange, the Top-40 index closed down 0.38%, while the broader All-share index fell 0.46%, mirroring the global equities rout triggered by growing recession fears.
The government’s benchmark 2030 bond was higher, with the yield down 1.5 basis points at 10.420%.
South Africa’s National Treasury said on Wednesday it would start auctioning a new floating rate note next week as part of efforts to expand its offering of debt instruments.
(Reporting by Bhargav Acharya in Bengaluru and Anait Miridzhanian in Gdansk; Editing by Kenneth Maxwell and David Evans)
