South African currency, rand, weakened against the US dollar on Monday as the Marxist Economic Freedom Fighters (EFF) party called for nationwide protests. The rand traded at 18.4350 against the dollar at 0743 GMT, down 0.16% from its previous close. Security forces announced 87 arrests for public violence in the past 12 hours. EFF is demanding President Cyril Ramaphosa’s resignation and protesting against power cuts that have been crippling the country. Experts say this could harm sentiment on South African markets if the outcome is bad.
ETM Analytics warned that EFF’s call for a national shutdown constitutes a risk event for the country. A Reuters poll indicates that South Africa’s Reserve Bank will raise interest rates for the final time in this cycle on March 30 by 25 basis points due to slower inflation and a weak economy resulting from power disruptions. Statistics South Africa is due to publish February inflation figures on Wednesday, which will give more clues about the health of Africa’s most industrialized economy.
In early trades, the government’s benchmark 2030 bond was stronger with the yield down eight basis points to 9.955%. While EFF’s protests are likely to disrupt businesses, it remains unclear how long they will last and whether they will be peaceful. South Africa’s economy is still reeling from the effects of COVID-19, and power cuts have added to the crisis, leading to a sharp contraction in the GDP. Observers warn that EFF’s call for protests could worsen the already dire economic situation in the country.
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