South Africa’s rand weakens as China virus knocks risk appetite

JOHANNESBURG, Jan 30 (Reuters) – South Africa’s rand weakened against the dollar early on Thursday as concerns over the rapid spread of a new virus from China, coupled with a weak domestic economic outlook, weighed on sentiment.

At 0630 GMT, the rand ZAR=D3 traded at 14.6800 per dollar, 0.38% weaker than its previous close.

The death toll from the virus outbreak in China has risen to 170, with over 7,700 people infected, and more cases are being reported around the world.

For the rand, investors are also cautious about South Africa’s poor economic outlook, with state power utility Eskom’s creaky fleet of coal-fired plants struggling to meet electricity demand.

Eskom said on Thursday that the power system was tight, and warned it might implement rotational power cuts in the evening.

The utility implemented severe nationwide power cuts in several bursts last year and sporadically earlier this month.

The power cuts have pushed the economy to the brink of recession and piled pressure on President Cyril Ramaphosa, who came to power with a pledge to revive investor confidence and lift economic growth.

In fixed income, the yield on the benchmark government bond ZAR186= was up a single basis point to 8.035%.

(Reporting by Olivia Kumwenda-Mtambo; Editing by Kim Coghill)

(([email protected]; +27 11 595 2817; Reuters Messaging: [email protected]))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.