JOHANNESBURG (Reuters) -The South African rand endured deepening losses on Thursday, as severe power cuts and deadly floods weighed on the economic growth outlook.
At 1438 GMT, the rand traded at 15.3650 against the dollar, around 2.23% weaker than its Wednesday close and taking losses since the end of last week to almost 5%.
State utility Eskom reduced scheduled power outages from “Stage 4” to “Stage 2” on Thursday, but investors are worried that the outages could persist into the southern hemisphere winter months.
Last week’s devastating floods in KwaZulu-Natal province meanwhile caused at least 10 billion rand ($660 million) of infrastructure damage, a reminder that the country is vulnerable to the impact of climate change.
Commerzbank analysts said in a research note that the rand was under significant selling pressure, pointing to increased risks linked to the power cuts and floods.
They also noted that March annual inflation had come in slightly below expectations on Wednesday at 5.9%, another factor acting against the rand as a reading of 6.0% or over would have increased the arguments for the central bank to pursue more aggressive policy tightening. The central bank’s inflation target range is 3%-6%.
Stocks were also lower, with the Johannesburg Stock Exchange’s Top-40 Index closing 0.52% down at 66,418 points and the broader All-Share Index losing 0.59% to 73,351 points.
Anglo American dragged the blue-chip index downwards, after the miner warned its first-quarter production fell 10% year-on-year. It’s Johannesburg-listed shares fell 6.6%.
($1 = 15.1498 rand)
(Reporting by Alexander Winning and Emma Rumney; Editing by Emelia Sithole-Matarise)
