South Africa’s rand extended the previous day’s losses in early trade on Thursday as the U.S. dollar hovered near a seven-week high on optimism over U.S. debt ceiling talks.
At 0811 GMT, the rand traded at 19.4350 against the dollar , almost 0.9% weaker than its previous close. On Wednesday, it also fell around 0.9%.
The dollar was trading about 0.18% up at 103.070 against a basket of global currencies, after U.S. government leaders agreed to negotiate to avoid a damaging debt default.
The risk-sensitive rand often takes cues from global factors like U.S. economic policy in the absence of major local drivers.
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It has been weighed down at home by South Africa’s power crisis, with state utility Eskom warning on Thursday that it may have to increase scheduled outages to an even higher level.
“The broad R19.00/R19.50 range remains intact for now, but (there) is a distinct feeling of unease over the rand,” said Andre Cilliers, currency strategist at TreasuryONE.
“The G7 meeting kicks off today with South Africa not being invited, load-shedding continues unabated, and there is some concern over the S&P’s credit rating review tomorrow,” he said.
Shares on the stock market were little changed. The Top-40 (.JTOPI) index and the broader all-share (.JALSH) were up about 0.3% in early trade.
South Africa’s benchmark 2030 government bond was weaker, with the yield up 5.5 basis points at 11.110%.
Reporting by Tannur Anders and Nellie Peyton Editing by Mark Potter
