Rand breaches $14 as Eskom sours outlook
South Africa's rand weakened past 14 per dollar on Thursday as power utility Eskom entered a fifth straight day of blackouts that have discouraged investors over the economy, days before the annual budget.
At 0630 GMT, the rand was up 0.2% to 14.0425 per dollar, halting a slide that has seen the currency tumble around 3% in three sessions as a rising dollar compounded the pain of the Eskom crisis.
"... The heightened domestic risk premium has prompted selling, with almost R2-billion of net outflows from the domestic bond market yesterday," analysts at Rand Merchant Bank said in a note..
The dollar out-stripped most other currencies, supported by good inflation data and weak growth in Europe.
On Wednesday, the government said power utility Eskom was technically insolvent and needed an urgent bailout to help it manage its more than $30 billion of debt as it battles to keep its plants running.
On Thursday, Eskom said it would cut 2 000 MW of power from the national grid from 0600 GMT.
Eskom poses a threat to the country's credit rating, which is hanging by a thread with Moody's, the last of the top three agencies to rate it investment grade. Its problems have helped push the rand past 14.00 for the first time in almost a month.
Bonds have also suffered, with the yield on the benchmark 10-year government issue adding 3.5 basis points to 8.93%.
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