Yesterday, the South African rand was sent into the negative territories by its major currency rivals in trading sessions. The greenback, who prior to yesterday’s run lost to the rand, took back its losses.
The rand weakened as a result of a string of unfortunate results in South Africa’s poor economic performance. On top of that, Eskom is still one of the main contributing factors that either sends it higher or lower.
The USD/ZAR exchange rate rose by 0.30% or 0.0442 points in Wednesday’s trading sessions. The pair even extended its rally yesterday from R14.7584 to a peak of R14.8675. It managed to take back most of its losses on the prior sessions back on Tuesday.
The troublingly weak performance of the South African consumer price index slowed the rand in trading sessions. Traders are cautious whether the rand will shift into a more bearish path amidst poor economic performance.
South Africa’s CPI was projected to decline to 0.2% from 0.3% in this reading. However, the Statistics South Africa Head Office showed the CPI dropped to 0.0% on a month-over-month basis.
Meanwhile, on a year-over-year basis, the South African CPI remained still as forecasted at 4.0% based on yesterday’s report.
Perhaps one, if not, the biggest contributing factor to the rand’s current levels is the country’s public electricity utility, Eskom.
The polarizing conversations about the choice for the new leader of Eskom sparked racial debates. Last week, Andre de Ruyter revealed he would take on the role of the head of the South African company next year.
The appointment made by the Eskom board bagged mixed reactions, with the majority feeling uneasy about the decision.
In a place where racial bias is a simmering topic, the announcement will, of course, be largely discussed.
One known local critic was immediately fed up with the clamor about the appointment. He pointed out that the country’s currency, credit rating, and economy are on the line, yet the people are talking about race.