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South African Rand Weakens Ahead Of Eskom Corporate Results

South Africa’s rand weakened against a stronger dollar in early trade on Tuesday, as investors waited anxiously for cash-strapped power utility Eskom to post their financial results.

At 0611 GMT, the rand traded at 12.0200 per dollar, 0.59 percent weaker than its New York close on Monday.

The currency breached the psychological 12 rand per dollar last week for the first time since mid-2015 as expectations of economic reforms boosted sentiment towards local assets.

The rand has been one of the best-performing currencies globally since mid-December, buoyed by hopes that the new leader of the ruling African National Congress (ANC), Cyril Ramaphosa, will follow through on promises to root out corruption and kick-start economic growth.

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“The price action in the rand would suggest that the markets would now like to see tangible outcomes from the various suggested initiatives, the results today from the electricity utility is likely to have the markets exercising some caution,” Nedbank analysts wrote in a note.

Investors will be looking to Eskom’s interim results for clues on the financial health of one of South Africa’s largest state companies. Ratings agencies regularly cite Eskom as a threat to the country’s already strained public finances.

In fixed income, the yield for the benchmark government bond rose 2.5 basis points to 8.57 percent, reflecting weaker bond prices.

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Written by PH

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