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Rand plunges to seven-week low

By Khulile Thwala

The Rand plummeted to a seven-week low on Monday over rising concerns about the impact of South Africa’s power crisis.

Worth noting is that the Lilangeni is pegged to the Rand. According to IOL News, Investors are still concerned about the government’s plan to end load shedding as there is still no decision on declaring a national state of disaster on Eskom, following a Cabinet Lekgotla.

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It was further reported that the South African currency plummeted by 0.4 per cent to E17.61 against the US dollar around lunchtime on Monday, its lowest since mid-December 2022 as a tangible solution to the energy crisis was still not in sight.

Power cuts enforced by Eskom to curb a total grid collapse have increased across South Africa and continue to plague businesses and undermine economic growth, while also fuelling food inflation.

Last month, the South African Reserve Bank slashed its 2023 growth forecast for South Africa to 0.3 per cent from the previous 1.1 per cent, due to extensive and damaging load shedding.

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Eskom has projected that sustained high levels of load shedding look set to continue for the next 12 to 24 months before additional capacity is brought into the grid.

Anchor Capital investment analyst Casey Delport said the increase in the frequency and intensity of load shedding had contributed to a weaker Rand.

“The impact of load shedding on the economy and the food system is severe, to say the least. Load shedding increases cost directly and indirectly through higher rates of wastage and spoilage within food chains,” Delport said.

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