South African Rand Plunges to New 2023 Low: 10-Hour Power Outages Cited

• The South African rand fell to a new 2023 low of 18.636 local currency units for every dollar on March 7, due to the country’s power shortages and its recent grey-listing by the Financial Action Task Force (FATF).
• South Africa is currently facing 10-hour power outages, prompting President Cyril Ramaphosa to appoint the country’s first minister of electricity.
• Additionally, some commentators are arguing that South Africa’s addition to FATF’s greylist may also be contributing to the rand’s poor performance against major global currencies.

South African Rand Plunges to New 2023 Low

Just a few weeks after tapping its best exchange rate versus the greenback in 2023, the South African rand fell to a new 2023 low of 18.636 local currency units for every dollar on March 7.

Power Outages Fueling Exchange Rate Slide

South Africa’s power shortages as well as the country’s recent grey-listing by the Financial Action Task Force (FATF) are believed to be fueling the rand’s slide. 10-Hour Power Outages have been reported across homes and businesses in South Africa leading President Ramaphosa to appoint a Minister of Electricity – Kgosientsho Ramokgopa – who will facilitate coordination amongst departments and entities involved in crisis response, work with Eskom leadership, and accelerate procurement of new generation capacity.

Commentators Blame FATF Grey Listing

Some South African commentators have argued that the recent addition of South Africa to the Financial Action Task Force (FATF)’s greylist could be one of the reasons why the rand has recently performed poorly against major global currencies. At the time of writing (4:10 p.m. EST, March 10), the rand-to-dollar exchange rate stands at just under 18.6 units per greenback.

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