Rand extends losses, Eskom funding fears weigh

South Africa’s rand eased one percent to fresh six year lows against the US dollar.

JOHANNESBURG – South Africa’s rand eased one percent to fresh six year lows against the US dollar on Thursday, as a new government rescue plan for Eskom highlighted the huge burden fixing electricity shortages will have on state coffers.

Rand extends losses, Eskom funding fears weigh

South Africa’s government said it would increase diesel and gas imports and sign a private sector coal-fired power plant deal as it seeks to halt chronic electricity shortages that have hobbled the economy.

Ratings agencies Standard & Poor’s and Moody’s, set to review South Africa’s credit status on Friday, cited the bleak power outlook as a contributing factor in recent downgrades of the country’s credit rating.

South African currency. Picture: Taurai Maduna/Eyewitness News

“Headlines suggesting that National Treasury will fund Eskom means there is an increased fear of them taking the sovereign rating with them,” said Mark Southworth, bond dealer at Citibank.
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By 1551 GMT the rand had slipped 0.85 percent to 11.6380 per dollar, extending losses to a fresh six-year low and trading well outside a range that had offered support at 11.5000.

Local bond yields generally slipped, having hit a month-high in the previous session, although the return on the benchmark 2026 issue edged up 0.5 basis points to 7.925 percent.