JOHANNESBURG: The South African rand clawed back on Tuesday, after domestic power cuts and a stronger US dollar in the previous session pulled down the currency to its weakest level so far this year.
As of 0610 GMT, the rand traded at 16.1450 against the dollar, 0.46% firmer than its previous close, despite the dollar holding ground near a 20-year high.
A stronger dollar makes high-yielding but riskier assets such as the rand less attractive to investors.
The rand hit 16.2650 per dollar on Monday on the back of a stronger dollar and as power utility Eskom resumed rotational power outages. The outages are a major brake on economic growth.
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“The next major resistance level in the rand is now around the 16.3400 level, and a break below 16.0500 would provide the catalyst for a recovery towards 15.75,” analysts at Nedbank said in a note.
Government bonds also recovered, with the yield on the benchmark 2030 instrument down 2.5 basis points at 10.18%.
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