Rand Underperforms EMEA Peers, Retail Sales Up Today

The South African rand underperforms on the back of concerns about the local energy crisis and other familiar headwinds, with USD/ZAR last seen at ZAR19.1920, up ~1,160 pips on the day. A clearance of May 12 all-time high of ZAR19.5148 would expose the psychological ZAR20.00 figure. Bears continue to look for a pullback towards May 2 high of ZAR18.5075.

• Local media have circulated an opinion piece by EE Business Intelligence analyst Chris Yelland, who flagged the risk of exacerbated load-shedding due to additional maintenance works at the Koeberg nuclear plant. Based on the information provided by Eskom, the analyst noted that on top of the current maintenance works, the utility is planning a further 200-day outage of Koeberg Unit 1 from July 24 next year, which will remove generation capacity equivalent to one stage of load-shedding. Ongoing maintenance is facing delays amounting to around 45 days, with Unit 1 expected to come back online in August.
• Local-currency bonds take another hit, losing ground across the curve, with 10-year yield returning above the psychological 12% level. South Africa's 10-year inflation breakeven rate has moved above 7% again. Yesterday's auction for 2032, 2035 and 2037 bonds attracted underwhelming demand, in line with this month's trend, despite relatively high returns offered by the local debt.
• South Africa's retail sales will be published at London noon. They may have shrunk 0.7% Y/Y in March after a 0.5% contraction in February, according to a Bloomberg poll of analysts. On a sequential basis, consensus looks for a 0.2% M/M increase after a 0.1% contraction in the previous month.
• Just as a heads up, Finance Minister Godongwana's testimony to the SCOPA on Eskom corruption allegations is currently underway.