December 7, 2018 / 7:42 AM / a year ago

South African rand claws back lost ground in early trade

South African Rand coins are seen in this photo illustration taken September 9, 2015. REUTERS/Mike Hutchings

JOHANNESBURG (Reuters) - South Africa’s rand steadied in early trade on Friday after tumbling more than 2 percent the previous session, weighed down by news that the country’s current account deficit widened in the third quarter and woes at state-run power firm Eskom.

At 0630 GMT, the rand traded at 14.0600 per dollar, not far off its New York close of 14.0450 in the previous session.

Data released on Thursday showed the current account deficit widened to 3.5 percent of gross domestic product in the third quarter, and a warning by Eskom that it may restructure its debt saw the rand slide to 14.2100, its weakest since Nov. 16, in the previous session.

Africa’s most industrialised economy has experienced a week of nation-wide power outages, known as load-shedding, which Eskom has blamed on low coal supplies as well as maintenance of its ageing fleet of power stations.

“The biggest threat to the (South African) economy remains the embattled Eskom,” Bianca Botes, treasury manager at Peregrine Treasury Solutions, said in a note.

“The effect of an extremely strained fiscus, coupled with load shedding, spells disaster for future economic growth.”

Botes added that the rand would also remain under pressure as the trade war hangs over the global market environment, seeing investors rapidly dumping riskier assets for safe havens.

Investors are also eyeing U.S. payrolls data later in the session for trading cues.

Reporting by Olivia Kumwenda-Mtambo, Editing by Sherry Jacob-Phillips

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