Rand Sinks as South African Electricity Grid Fails
February 12th, 2008Via: Bloomberg:
Gold is above $900 an ounce and platinum has never been higher, yet traders are selling the South African rand faster than any other major currency because President Thabo Mbeki can’t keep the lights on.
The rand is down 12 percent this year against the dollar, six times more than the next-worst performer among the world’s most widely traded currencies. UBS AG forecasts the sharpest drop in the rand since 2001 this year, and option prices show it has the worst prospects of any currency.
The decline signals the world is losing confidence in South Africa’s ability to remedy a power shortage that has disrupted mining of some of the world’s most valuable precious-metals deposits just when prices are climbing. Mbeki, the 65-year-old successor to Nelson Mandela who has presided over nine years of economic growth, steps down in 2009, and the man most likely to replace him, Jacob Zuma, is due to stand trial this year on charges from fraud to tax evasion.
“The currency is the share price of a country,” said George Glynos, managing director of Johannesburg-based Econometrix Treasury Management, which advises investors on bond and foreign-exchange holdings. “If anyone wants to know what foreigners are thinking about South Africa at the moment, they need look no further than the rand.”
The rand fell 6 percent to 7.81 per dollar last week, the largest weekly drop since June 2006, and was little changed at 7.79 as of 5:05 p.m. in Johannesburg today. Zurich-based UBS, the world’s second-biggest currency trader last year with almost 15 percent of the market, according to Euromoney Institutional Investor Plc, forecasts continued “rand weakness.”
State-owned Eskom Holdings Ltd., which supplies 95 percent of South Africa’s power, cut electricity to businesses last month, and most of the country’s mines had to shut for five days. Eskom says the government ignored repeated calls to invest in the electricity grid, and it won’t be able to increase generation capacity until 2013.
South Africa will be the next Zimbabwe.
Especially if the likes of Jacob Zuma gets in to power.
Here’s an article on “THE COLLAPSE OF SOUTH AFRICA”
http://www.africancrisis.co.za/Article.php?ID=22454&
I have my suspiscions about the current “power crisis” I think its a good way to get this approved:
http://en.wikipedia.org/wiki/Pebble_bed_reactor
Zimbabwe/South Africa comparisons are specious…there is much much more going on here than meets the eye. Zuma is interesting – anyone so demonized by the main stream media is worth keeping a close eye on.
The downfall of Zimbabwe is clearly being deliberately orchestrated by outside powers in concert with Mugabe.
Simontzu,
Power of any kind, be it monetary, political, nuclear, cold fusion physics, you name it. This is the crisis at hand at work in many nation states in this world.
Power down, keep it simple, and keep it sweet and clean for the planet should be the motto of any politician on the planet.
Ha. Do you hear that message ANYWHERE?