Warning to Cape Town residents with unpaid bills, and Eskom to miss important target
The rand experienced a sharp decline on Wednesday, disregarding better-than-expected domestic inflation and retail sales data.
Instead, it was impacted by a stronger dollar and a significant rise in oil prices, which heightened inflation concerns.
The rand was trading at 16.8475 against the dollar, reflecting a 1% decrease from Tuesday’s close.
Key South African exports, such as gold and platinum, dropped by 3.2% and 4.5% respectively, while oil prices surged by more than 4% amid ongoing tensions in the Middle East.
Analysts anticipate continued pressure on the rand due to concerns that rising oil prices will elevate inflation in South Africa, a net energy importer.
The country’s annual inflation rate eased to 3% in February, aligning with the central bank’s target.
However, analysts caution that this slowdown may be temporary, as the repercussions of the US-Israel conflict with Iran are expected to influence future inflation reports.
Economists had predicted an annual inflation rate of 3.1%, down from 3.5% in January. Additionally, South Africa’s statistics agency reported a 4.2% year-on-year increase in retail sales for January, surpassing economists’ expectations of a 2.5% increase.
On the Johannesburg Stock Exchange, the Top-40 index was down 2.8%. Similarly, South Africa’s benchmark 2035 government bond weakened significantly, with the yield rising 15 basis points to 8.945%.
The US dollar was up 0.3% against a basket of currencies as investors awaited the US Federal Reserve’s rate decision later in the day, where it is widely anticipated that policymakers will maintain current interest rates.
The rand is currently trading around R16.99 to the dollar, closing higher after a gruelling week. The rand is at R22.55 to the pound and R19.49 to the euro.
In commodities, oil prices are still above $100 a barrel, currently at $112.3, while gold is $4,838.09 per ounce.
5 important things happening in South Africa today
Warning to Cape Town residents with unpaid municipal bills: Cape Town residents who fall behind on their municipal bills could soon face increasing pressure, including service cut-offs and blacklisting, as the city intensifies its efforts to collect unpaid debts. [News24]
Eskom grid expansion at risk: Eskom presented its Business Performance Report for the third quarter of the 2026 financial year to Parliament, revealing that its target to expand the transmission grid is at risk. The power utility had aimed to install 225 kilometres of transmission lines by March 31, 2026. However, it fell short, achieving only 186 kilometres. Eskom’s overall target for expanding the transmission grid is 423 kilometres by the same date, which it states is jeopardised by contractor constraints. [MyBroadband]
Government says fuel supply is stable—for now: The Department of Mineral and Petroleum Resources has stated that the national fuel supply is currently stable. This reassurance comes amidst increasing volatility in global energy markets due to the conflict in the Middle East. [ENCA]
South Africa’s stock exchange in trouble: South Africa’s financial regulator warned about the decrease in local listings, saying this raises questions about the depth and vibrancy of public capital markets and about how they can support economic growth. The decline of listed companies has come despite more trading venues and market participants that have increased competition and innovation, Financial Sector Conduct Authority Commissioner Unathi Kamlana said. [DailyInvestor]
Bad news for interest rates in South Africa next week: Inflation in South Africa has landed squarely on the South African Reserve Bank’s (SARB’s) new target of 3%, but interest rate cuts next week are unlikely due to the war in the Middle East. Consumer prices increased 3% year-on-year, down from 3.5% a month earlier, which was below the median estimate of 15 economists in a Bloomberg survey of 3.1%. Although the latest data is exactly in line with the SARB’s 3% target, it is unlikely to change the repo rate from its current level of 6.75% despite optimism at the start of the year. [BusinessTech]
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