JOHANNESBURG (Reuters) -South Africa’s rand weakened on Monday, as market sentiment was dented by worries about a rise in COVID cases in China and tightening restrictions in some cities of the world’s second-biggest economy.
At 1546 GMT, the rand traded at 17.3275 against the dollar, 0.42% weaker than its previous close.
China’s capital Beijing reported two deaths for Nov.
20, with the city’s most populous district urging residents to stay at home on Monday, extending a request from the weekend as the country fights numerous COVID-19 flare-ups.
This week, investor focus will be on an interest rate decision by the South African Reserve Bank (SARB) on Thursday, a day after the release of October inflation figures.
“The rand remains vulnerable to global risk sentiment… while domestically markets are tending towards a 75bp instead of a 100bp hike from the MPC this week, which is also weakening the rand,” Investec analyst Annabel Bishop said in a research note.
The implementation of ‘stage 5’ power cuts has also weakened the local currency, she added.
South Africa has seen the worst power cuts in years over the past six months as state power utility Eskom has struggled to meet electricity demands with its fleet of ageing, unreliable coal-fired power stations that are prone to breakdowns.
Shares on the Johannesburg Stock Exchange fell, mirroring similar moves in global equities as fresh COVID curbs in China spooked markets.
Overall on the stock market, the Top-40 index closed 0.96% lower, while the broader all-share ended down 0.88%.
The government’s benchmark 2030 bond was unchanged, with the yield at 10.395%.
(Reporting by Anait Miridzhanian and Bhargav Acharya; Editing by Jason Neely and Andrea Ricci)
