Rand falls amid growth concerns, power cuts

In early trade the rand was at R16.22 against the dollar, around 0.45% weaker than its previous close.
Image: Waldo Swiegers / Bloomberg

The South African rand fell in early trade 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 0610 GMT, the rand traded at 16.2270 against the dollar, around 0.45% weaker than its previous close.

Investors have flocked to the safe-haven US dollar on concerns about the US 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.

At home, struggling state power utility Eskom said on Sunday that it would increase the hours of the daily power cut for Monday and Tuesday because it lost more generation capacity over the weekend.

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.

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