By Lehlohonolo Lehana.
The rand plunged to a three-year low on Wednesday after a steep drop in the previous day, while international and domestic government bonds also fell, as fears grew of scheduled blackouts worsening during winter.
On 10 May, the rand was trading at R18.78/USD after hitting its weakest level since early May 2020 at R18.8325 earlier in the day.
The day before the lowest point (9 May), the currency had fallen by 1.7%.
Kieran Siney, the co-head of financial markets at ETM Analytics, said that the rand, alongside domestic bonds, is underperforming compared to other emerging markets.
“Until there is a concrete plan to resolve South Africa’s energy crisis that the market buys into, the underperformance will persist, notwithstanding the attractive yields on offer and deep undervaluation in the ZAR.”
ETM Analytics said poor sentiment echoed by the media drove investors to question the stability of the country as a result of load shedding; however, nothing out of the ordinary happened to reflect the decrease in the value of the rand.
By the end of 9 May, the average South African had endured an accumulated 34.56 days of blackout time for 2023 – matching the previous record set by 2022.
Researchers, analysts and politicians all point to the severity and frequency of rolling blackouts as only getting worse the colder temperatures become in the country.
With a colder climate, demand for electricity peaks while supply remains restricted due to units requiring maintenance, sabotage, corruption, a lack of alternative power producers and general mismanagement.