The South African rand continued to trade on the back foot on Tuesday, settling well over R19 to the dollar as stage 6 load shedding kicked in, rattling markets, while the dollar traded stronger.<\/p>\n\n\n\n
The local unit was trading at R19.18 on Tuesday afternoon, virtually unmoved by the higher-than-expected GDP print from Stats SA.<\/p>\n\n\n\n
The stats body reported GDP growth of 0.6% qoq for the second quarter of the year, beating economists expectations of between 0.1% and 0.4%.<\/p>\n\n\n\n
The mood from better-than-expected economic growth was soured by the implementation of stage 6 load shedding, however, with warnings from the minister in charge that higher or more intense stages of outages are likely to persist for some time.<\/p>\n\n\n\n
While South Africa’s ongoing power crisis has been priced into markets for some time, the rapid escalation to stage 6 comes after months of relative calm and amid assurances from the government and power utility Eskom that the energy situation was improving.<\/p>\n\n\n\n
According to economists at Nedbank, the rand has been jittery for last week, falling and recovering on various data points as they are released locally and globally.<\/p>\n\n\n\n
As has been the case for the past year, the rand’s weakness is also reflective of a stronger dollar, with the greenback hovering near three-month highs near the end of last week.<\/p>\n\n\n\n
The rand is also suffering from shifts in global sentiment, especially pertaining to China.<\/p>\n\n\n\n
Citadel Global noted that recent Chinese PMI reflected slowing overseas demand and are likely to result in increased calls on Beijing to unlock more stimulus spending.<\/p>\n\n\n\n
The dampened market conditions, however, are pushing investors into safe-haven currencies like the dollar, which negatively impacts riskier markets like South Africa.<\/p>\n\n\n\n
As a commodity exporter, a slower Chinese economy also spells bad news for South Africa and the rand.<\/p>\n\n\n\n
At 15h00, the rand was trading at these levels against major currencies:<\/p>\n\n\n\n