Rand extends losses after dismal mining data
Load-shedding and disappointing local economic data weighed on the rand for a second day on Thursday, with the local currency falling to a six-week low against the dollar.
Earlier, mining production for December surprised to the downside, falling 4.8% year-on-year, compared to consensus expectations of a 0.6% contraction.
At 2.05pm, the rand had reversed marginal earlier gains, and was 0.56% weaker at R14.1444/$, 0.64% softer at R15.9425/€, and down 0.32% to R18.1176/£. The euro was flat at $1.1267.
SA’s economic growth forecasts for 2019 are now at risk of a downgrade, said Investec chief economist Annabel Bishop, with recent pressure on the rand partially due to the government’s debt burden, as well as Eskom’s financial problems.
“A number of foreign investors are likely worried by SA’s dire electricity problems, with many potentially reconsidering future fixed investment in the country on concerns around security of electricity supply, particularly given the high-cost environment from government-administered price increases, including water and electricity,” she said.
International focus was on US-China trade talks, which began on Thursday in Beijing. Brexit is also on traders’s radars, as UK law makers may vote later on Thursday to take control of the Brexit process.