Eskom agrees to major price cuts, and the Gautrain gets a lifeline
The South African rand slipped on Friday as traders digested mixed monthly data from the central bank, the revenue service agency, and the National Treasury for clues about the health of Africa’s largest economy.
The rand traded at 15.9650 against the U.S. dollar, down about 0.3% from Thursday’s close.
The dollar was little changed against a basket of currencies, while gold — one of South Africa’s major exports — rose in price and was on track for a seventh consecutive month of gains.
Data from the South African Reserve Bank showed that M3 money supply growth last month was 7.44%, down from 8.16% in December.
Private sector credit growth for January was 8.83%, well above December’s 8.74% but below the 8.84% estimated in a Reuters poll.
South Africa’s revenue service agency published trade data showing the country recorded a trade surplus of R9.31 billion ($584.73 million) in January. Analysts polled by Reuters had expected a surplus of R4.45 billion.
The National Treasury published budget balance data that showed South Africa recorded a budget deficit of R69.69 billion ($4.38 billion) in January.
On the Johannesburg Stock Exchange, the Top-40 index was last up 1.3%.
South Africa’s benchmark 2035 government bond was slightly weaker as the yield rose by 1.1 basis points to 7.995%.
“While sentiment (in local assets) is positive for now, any shift in commodity prices, global risk appetite or domestic politics could test the sustainability of the recent strength,” said TreasuryONE currency strategist Wichard Cilliers.
As of Saturday, 28 February, the rand is trading at R15.93 to the dollar, R21.48 to the pound, and R18.80 to the euro.
Gold is currently valued at $5,278.01 per ounce, while oil prices have risen to $73.19 per barrel. [Reuters]
5 important things happening in South Africa today
Eskom caves: Eskom has agreed to lower electricity prices for ferrochrome firms in South Africa by an additional 29%. Samancor Chrome and Glencore-Merafe’s ferrochrome businesses warned that thousands of jobs would be lost without the price cuts, with retrenchment talks set to begin after a deadline to find a solution ended today, 28 February. The relief lowers the tariff to 62 cents per kWh, which is far lower than what South African households pay. [Reuters]
Gautrain extension: The 20-year concession to operate the Gautrain has been extended by an additional 6 months amid struggles to find a replacement. The concession for the current operator, Bombela Operating Company, was supposed to end in March. [News24]
Profit boom for Northam: Northam Platinum has benefited from sky-high platinum prices. The mining company saw its profit reach R7.9 billion in its latest interim results, up over 3,000% from the comparable half-year. [Daily Investor]
DA leadership race: Gauteng DA leader Solly Msimanga has announced his plans to become DA federal chairperson when the party holds its congress in April. If elected, he would replace Ivan Meyer. Cape Town Mayor Geordin Hill-Lewis also announced that he wants to replace John Steenhusien as the DA Federal Leader. [eNCA]
Media closures: Media24 plans to close City Press, which has been struggling in the transition from print to digital. Media24 said that more than two dozen employees work at City Press and that it will try to limit job losses. [News24]
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