The South African rand plunged to a three-year low on Wednesday after a steep drop in the previous day, while international and domestic government bonds also fell, as fears grew of scheduled blackouts known as loadshedding worsening during winter.
At 0830 GMT, the rand was trading at 18.785 against the U.S. dollar, after hitting its weakest level since early May 2020 at 18.8325 earlier in the day. On Tuesday, the rand hadSouth Africa's sovereign dollar bonds dropped, with longer dated maturities falling the most. The 2052 maturity fell more than 1 cent to 82.4 cents in the dollar . The yield rose above 9%, its highest level in almost six months.
The delay is likely to add further pressure on the grid during winter, when loadshedding across most parts of the country is already more than 10 hours a day. "Until there is a concrete plan to resolve SA's energy crisis that the market buys into, the underperformance will persist, notwithstanding the attractive yields on offer and deep undervaluation in the ZAR."
ETM Analytics said in a separate note on Wednesday morning that misleading headlines on Tuesday had sparked the market rout by giving "the impression that was losing control of the grid".
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