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Africa, Forex

South Africa’s rand firmer after Ramaphosa’s speech

JOHANNESBURG (Reuters) – South Africa’s rand was firmer on Friday after President Cyril Ramaphosa set out brief plans to stimulate economic growth during his State of the Nation address, although his speech was short on specifics and timeframes.

At 0708 GMT the rand was 0.41% stronger at 14.8910 per dollar.

Ramaphosa acknowledged in an annual address to parliament on Thursday evening that growth had stalled, exacerbating high levels of unemployment and increasing hardship for millions of citizens.

He said that his government would shortly issue plans to procure more power and increase generating capacity outside struggling power utility Eskom.

Eskom supplies more than 90% of South Africa’s electricity but is struggling with high debts and power stations in need of refurbishment.

It has been forced to impose several rounds of severe power cuts in the past year that have dented the country’s economic growth.

The rand initially weakened after radical leftist party the Economic Freedom Fighters (EFF) delayed the start of Ramaphosa’s speech, Sanisha Packirisamy an Economist at Momentum Investments said.

However, it then firmed after announcements on renewable energy procurement and the release of broadband spectrum by the end of the year, she said.

“While the market is likely to react positively to the developments in the energy sector, there was a notable lack of detail around timelines,” Packirisamy added, however.

Peter Attard Montalto, head of capital markets research at Intellidex, shared the same sentiment, saying that much in Ramaphosa’s speech was a repetition of last year.

“In order to credibly press the accelerator, there clearly had to be specificity on policy issues,” he said in a note.

In the equities market, the Johannesburg All-Share index was flat in early trade at 57,825 points, while the top 40 index inched 0.04% lower to 52,038 points.

Bonds were flat, with the yield on benchmark 2030 paper at 7.985 basis points.

(Reporting by Nqobile Dludla; Editing by Jan Harvey)

Illustration photo of South African rand

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