Johannesburg - South Africa's rand steadied against the dollar early on Tuesday, with a firmer greenback and electricity shortages in Africa's most advanced economy still key headwinds for the local unit.
At 06h32 GMT the rand was trading 0.11 percent softer at 12.1500 to the dollar compared with its closing level on Monday.
The dollar has basked in the growing likelihood of a US rate increase, which would be the first in nearly a decade.
“The dollar has firmed again of late, partly due to somewhat hawkish Fed official rhetoric late last week which alluded to a June lift-off in the Fed funds rate still being a prospect,” Carmen Nel and John Cairns of Rand Merchant Bank said in a market note.
“This would be earlier than the December hike currently discounted by the market,” they added.
Recent comments from Federal Reserve officials suggest the US central bank has not ruled out the chance of raising interest rates by June even as some analysts doubt that possibility amid signs of renewed economic weakness.
Locally, South Africa is in the midst of its worst electricity crisis since 2008 and South Africans are subjected to frequent controlled power cuts which power utility Eskom implements to prevent the grid from being overwhelmed.
The government has said its economic growth forecast for 2015 could halve to 1 percent from 2 percent because of power constraints.
“Electricity supply is still the main constraint on local growth and the news flow remains negative,” Nel and Cairns said.
In fixed income, the yield for the 2026 benchmark was up 0.5 basis points to 7.805 percent.
Reuters