The rand is not experiencing its usual strong start to the year as domestic issues are scaring off investors. <\/p>\n\n\n\n
The rand ended last Friday, 5 January at R18.66\/$ after experiencing volatility after releasing the minutes from the Federal Open Market Committee\u2019s (FOMC\u2019s) December meeting caused some risk. The rand has not seen much change since, sitting at R18.22\/$ today, 9 January. <\/p>\n\n\n\n
“The domestic currency, which typically experiences a stronger period around the turn of the year due to lower global financial risk-aversion, has not seen much strengthening, as domestic concerns continue to weigh on it,” Investec Chief Economist Annabel Bishop said. <\/p>\n\n\n\n
South Africa’s new integrated resource plan (IRP) was published for public comment last week and has received widespread criticism. <\/p>\n\n\n\n
The IRP advocates for prolonged use of coal and nuclear usage while stating that renewable energy technologies do not provide a secure energy supply. This comes despite former Eskom CEO Andre de Ruyter stating that there are 66,000 MW worth of renewable energy projects in the pipeline. <\/p>\n\n\n\n
There have also been calls for greater private-sector participation, but the plan only sees a pipeline of projects from the “business community” with a total generation capacity of 10,400 MW, excluding projects with no specified location or commercial operation date.<\/p>\n\n\n\n
Congestion at the Cape Town and Durban ports also continues to impede growth, with concerns over the energy and freight outlook adding to the lacklustre nature of the rand. <\/p>\n\n\n\n
There are also concerns over this year’s elections, with the growth in political noise in the run-up to the elections and the uncertainty over the probable coalition government adding to the weak nature of the rand. <\/p>\n\n\n\n
There has also been a dramatic increase in the distrust of leadership over the last 20 years, with the Institute for Justice and Reconciliation Barometer for 2023 highlighting a decline in confidence in most major public institutions. <\/p>\n\n\n\n
The proliferation of new political parties ahead of the elections has impacted predictability, with several having the potential to bolster the ANC in a coalition government after the election. <\/p>\n\n\n\n