JOHANNESBURG - The rand tumbled more than 1 percent on Wednesday to its softest level in a week after Eskom said it would implement load-shedding for the first time in more than six months due to capacity shortages.
The rand was 1 percent weaker at 15.0550 per dollar, its lowest since 10 October.
Eskom said it will cut up to 2,000 megawatts of power from the national grid on Wednesday due to a shortage of generating capacity, starting at 9am and up until 9pm.
The comments pushed the rand past the crucial 15.00 mark, with deeper losses likely as the session wears on, traders said.
Eskom implemented one of the worst power cuts in several years in February, hurting small businesses without backup power generators and industrial firms that consume large volumes of power.
“There was an initial knee-jerk reaction to the announcement. And the longer it (blackouts) goes on, the worse it will be for the rand,” said currency dealer at TreasuryOne Andre Botha.
LOAD-SHEDDING: Schedules, info, and how it affects you
“Any improvement (in sentiment) will depend on clarity we get from now on about what is happening. But there’s definitely negative risk across the board,” Botha said.
A debilitating round of power cuts in February and March pushed first-quarter economic growth into contraction and raised the likelihood of the country losing its last investment-grade rating.
Bonds also weakened, with the yield on the benchmark government paper due in 2026 up 3.5 basis points to 8.27 percent.