Rand weaker as SAA struggles to stay aloft
Local factors such as SAA’s need for R2bn in funding are putting the local currency under pressure
The rand was weaker against the dollar on Monday morning, with the future of state-owned airline SAA uncertain, and concerns that SA is headed for further credit-ratings downgrades spooking investors.
State-owned entities (SOEs) SAA and Eskom are struggling with unsustainable debt burdens. The two SOEs are seen as the biggest threats SA’s credit rating.
Following a meeting with business rescue specialists at the weekend, public enterprise minister Pravin Gordhan said his ministry was in talks with the Treasury to raise funds to rescue SAA.
The airline was placed under business rescue in December in an attempt to keep it flying and save about 10,000 jobs.
The local currency was on track for its third consecutive session of losses on Monday, having already weakened 3.92% against the greenback so far in 2020.
SAA is posing a challenge to the Treasury ahead of this week’s 50th annual World Economic Forum (WEF) meeting in Davos, Switzerland, and the budget in February, Bianca Botes, corporate treasury manager at Peregrine Treasury Solutions, said in a note.
At 11.12am the rand had weakened 0.44% to R14.5342/$, 0.37% to R16.1123/€ and 0.26% to R18.8508/£. The euro was little changed at $1.1087.