Rand hits R19.00 to the US Dollar

The rand has broken through R19.00 to the US Dollar due to increased load-shedding and concerns about South Africa’s economic growth.

On Thursday, shortly after midday, the rand traded at R19.02 to the US Dollar, continuing the significant weakness seen over the last few days.

Three days ago, the rand traded under R18.30 to the greenback, but concerns about electricity supply problems hammered the local currency.

Many experts argue that the rand should be trading at around R16.50 to the dollar. However, it has not been below R17/USD since mid-January 2023.

Head of markets research at RMB Isaah Mhlanga told The Money Show that this is a domestic concern that is being reflected in the currency.

He mentioned some global events affecting the rand’s value, like poor data coming from China and geopolitical tensions.

However, he said the biggest driver had been the bad sentiment surrounding Eskom and potential stage 8 and above load-shedding.

“It all has to do with load-shedding – stage 8 and fears of a potential grid collapse,” Mhlanga said.

“It’s all sentiment-driven as far as the total collapse of the grid is concerned,” he said.

Sasfin Securities’ David Shapiro told Business Day TV that he is very concerned about the country’s structural problems and the impact of load-shedding. “It’s taking us down and doing enormous damage,” he said.

Shapiro pointed to the high operational costs retailers like The Foschini Group incur to keep the lights on during load-shedding.

This comes in addition to the customers they lose in that time, which Shapiro identifies as the “real problem” for these companies.

US Dollar to South African Rand Exchange Rate over the last month