Eskom bailout puts rand under pressure

Mon, 20 May 2019

Eskom bailout puts rand under pressure

News24
23 Apr 2019, 22:13 GMT+10

The rand looks set to trade under pressure on Tuesday as the Eskom bailout filters through global markets, according to Bianca Botes, corporate treasury manager at Peregrine Treasury Solutions.

Botes said in a morning note to clients that, in addition to the last-minute bailout of SA's power utility, the local currency would face pressure from the US scrapping waivers for Iranian crude oil purchases, which will likely strain sentiment across emerging markets.

The local currency opened the day at R14.15/$ and was trading at 14.21 to the greenback by 10:17, down 0.41% on the day.

Andre Botha, a senior dealer at TreasuryONE, said in a note to clients that the dollar was expected to be on the front foot on Tuesday as the market avoids "risky assets" in the wake of the US scrapping Iranian crude oil waivers.

"Iran has vowed to close the Strait of Hormuz in retaliation, which will impact oil supply to global markets," he said. "This has caused a definite ripple effect for global risk, and could see the rand tread a little water."

The spot dollar index - its value relative to a basket of six foreign currencies - was at 97.32 on Tuesday at 10:19, stable on the day after opening at 97.28.

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