Rand On Defensive Again As Eskom Crisis Continues

South African Rand is one of the worst EMEA performers today, resuming losses after a temporary reprieve last Friday. The escalating Eskom crisis continues to sap strength from the currency, with no end to crippling power outages in sight.

• Spot USD/ZAR changes hands at ZAR17.1493, up ~190 pips on the day, despite broader greenback underperformance. A break above Jan 6 high of ZAR17.4343 would support the bullish case, while bears look for a retreat under Jan 12 low of ZAR16.6950.
• Eskom announced that it would escalate load-shedding to Stage 4 this afternoon and warned that rolling blackouts could continue for the next two years, while the electricity utility implements a plan to increase its generation capacity.
• Meanwhile, President Cyril Ramaphosa called on Eskom to suspend the implementation of an 18.65% tariff hike approved by the national energy regulator. While the tariff increase will further squeeze household and corporate budgets, it is less than the 32% requested by the cash-strapped power provider.
• The aggregate BBG Commodity Index is slightly firmer this morning, with the precious metals subindex has erased its earlier gains. Gold operates near neutral levels as we type.
• Local-currency bond yields have retraced earlier upticks and have sunk into negative territory. 10-year breakeven inflation rate sits at 5.96% after printing a new multi-month low of 5.89% last Friday.