By Mpho Hlakudi.
South Africa’s rand and bonds plunged after the state-owned electricity company warned it might implement power cuts for the first time in more than 10 months, signalling a potential hit to an economy struggling to emerge from years of stagnation.
Eskom may carry out rotational blackouts over the weekend to repair breakdowns and replenish its reserves, the utility’s chief executive, Dan Marokane, said on Friday.
The warning comes a day after Eskom reported its first profit since 2017.
While Eskom has made significant progress in stabilizing supplies, outages in the past have taken a significant toll on the economy — as much as R899 million per day, according to central bank estimates.
“It will put a near-term dampener on investor optimism over the domestic economic outlook,” said Lee Hardman, a senior FX strategist at MUFG Bank.
“It provides a timely reminder that downside risks aren’t just from external sources.”
The rand declined as much as 0.6%, reversing an earlier gain, and traded 0.3% weaker at 18.6486 per dollar by 11:12 a.m. in Johannesburg. The yield on benchmark 2035 government bonds climbed nine basis points to 10.42%.