The rand traded above R16 against the dollar on Tuesday after Eskom implemented stage 6 load-shedding for the first time since 2019.
The move by the state-owned power utility comes after a week of illegal strikes by Eskom workers over wage negotiations gone awry, and as diesel reserves at its emergency power plants runs low.
During a media briefing on Tuesday, Eskom CEO André de Ruyter said the power system is subject to considerable risk due to unlawful industrial action that had “increased in intensity” on Monday night. Stage 6 began on Tuesday and is expected to be implemented again on Wednesday.
“Stage 6 is disastrous for the economy,” said IG market analyst Shaun Murison. “While the primary influence on the rand remains from the international front, an escalation in load-shedding has soured business and investor sentiment, weighing on the domestic currency.”
At 8pm, the rand had weakened 1.37% to R16.0598/$, 0.76% to R16.9101/€ and 0.75% to R19.5823/£. The euro was 0.48% weaker at $1.0531.
The JSE closed firmer amid mixed global markets as China’s relaxation of some Covid-19 restrictions supported sentiment.
One of the major headwinds on global growth has been China’s zero-Covid-19 policy. The country announced on Tuesday that it is halving the time visitors will have to spend in quarantine on arrival, a move welcomed by investors.
“The easing of China’s quarantine times could support the idea that Beijing might be getting closer to pivoting away from their zero-Covid-19 policy, but that shift probably can’t happen till closer to the end of the year,” said Oanda senior market analyst Edward Moya.
“Chinese authorities initially triggered some alarm after noting that the zero-Covid-19 policy could be in place for the next five years. The relaxation of measures shows that the country’s authorities realise they can’t keep their strict Covid-19 controls,” said Moya.
Meanwhile, investors continued to assess whether stocks have found a bottom or are just briefly rebounding from oversold conditions. Markets have endured a volatile period on fears that high inflation and aggressive monetary tightening by central banks will tip the global economy into a recession.
The JSE gained 0.34% to 68,058 points and the top 40 0.43%. Industrial metals rose 1.16%, precious metals 0.78% and industrials 0.26%.
At 8pm, the Dow Jones industrial average was 0.95% weaker at 31,140 points. European and Asian markets were firmer.
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