South Africa’s rand under pressure, stocks set to open flat

South Africa’s rand weakened against the dollar early on Tuesday, staying close to a one-year low hit in the previous session, as the resignation of a top Treasury official and financial woes at the sole power utility hurt investor sentiment.

According to Reuters’ report, at 0647 GMT, the rand was traded at 14.5100 per dollar, 0.22 percent weaker than its overnight close.

The rand hit a low of 14.5750/dollar on Monday, it weakest since November last year, as Treasury and Eskom woes weighed.

“Numerous political concerns are weighing. The biggest of these yesterday was the resignation of the veteran National Treasury budgeter Michael Sachs as a result of the growing presidential power in decision-making,” Rand Merchant Bank analyst John Cairns wrote in a note.

He added: “The threat of an unaffordable free higher education announcement remains.”

A report commissioned by the presidency and released on Monday found that South Africa should raise state spending on higher education by around a third to at least 1 percent of GDP.

Stocks were set to open flat at 0700 GMT, with the JSE securities exchange’s Top-40 futures index barely changed.

In fixed income, the yield on the benchmark government bond was flat at 9.48 percent.