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South African rand slips; eyes on Reserve Bank this week


JOHANNESBURG, Jan 23 (Reuters) – The South African rand slipped on Monday as the U.S. dollar edged up on global markets, with investor attention this week pinned on the South African Reserve Bank’s first interest rate decision of the year.

At 1525 GMT, the rand traded at 17.2050 against the dollar, over 0.4% weaker than its previous close. The dollar was about 0.3% firmer against a basket of major currencies .

The SARB will announce its rate decision on Thursday, with 11 of the 20 economists polled by Reuters predicting a 50 basis point (bps) hike to 7.50% (ZAREPO=ECI). Eight forecast a 25 bps increase and one no change.

Data last week showed December consumer inflation slowed to 7.2% year-on-year (ZACPIY=ECI) from 7.4% the previous month, in line with analysts’ forecasts but still well above the central bank’s 3%-6% target range.

Most economists polled by Reuters see no further rate hikes after this week.

The rand lost more than 1% against the dollar last week on investor concerns over a power crisis that has led to daily electricity outages this month.

On Monday, struggling utility Eskom said in a statement that the outages would remain at “Stage 4” from 4 p.m. local time (1400 GMT) until 5 a.m. and “Stage 3” from 5 a.m. to 4 p.m. the following day until further notice.

Almost half of Eskom’s 46,000 megawatt (MW) nominal generating capacity is currently offline because of breakdowns or repairs. Stage 4 means up to 4,000 MW of capacity needs to be shed from the national grid, resulting in about six hours of power cuts a day for many households.

The government’s benchmark 2030 bond was little changed on Monday, with the yield down 1 basis point at 9.78%. The Johannesburg Stock Exchange’s All-share index (.JALSH) ended 1.08% higher, mirroring gains in global equities.

Source: Reuters