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Johannesburg – The rand weakened on Wednesday as power supplier Eskom implemented widespread electricity cuts for the fourth straight day, while attacks against foreign nationals also weighed on sentiment.
By 17:00 GMT the rand has slipped 1.42% to R12.1870 per dollar, near its softest level in two weeks.
Against the euro, the local unit slipped more than one percent to a one week-low of R12.9543/$. The currency was equally weak against the British pound, shedding nearly 1-1/2% to 17.9890 per sterling.
"The rand's been knocked off the ground today," said Ion de Vleeschauwer, a currency dealer at Bidvest Bank. "Load-shedding is becoming a bit of a problem."
READ: Brown: Expect winter load shedding as Eskom ups maintenance
South Africa lost a quarter of its power supply on Tuesday in one of its worst outages in years.
Power supply was also unstable on Wednesday, and Eskom said it would reduce power supply, citing a shortage of generation capacity.
Traders said the currency was also affected by negative sentiment following a wave of anti-foreigner violence that has killed at least four people.
READ: Xenophobic attacks will hurt foreign investor confidence - economist
Immigrants in downtown Johannesburg shut their shops on Wednesday, fearful that the attacks mostly focused in the port city of Durban threatened to spread.
"The more this continues, the more negatively it’s going to impact on sentiment towards the country," de Vleeschauwer said of the violence. Sixty people were killed in a flare-up of similar violence in 2008 in which foreigners were attacked.
Local government bonds tracked the currency weaker, with the benchmark paper due in 2026 dropping 7 basis points to 7.795%.
