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Johannesburg - The rand weakened against the dollar on Monday, largely weighed down by Eskom's warning of deeper power cuts that are likely to dampen investor sentiment.
Government bonds also snapped four days of gains and yields edged higher after sliding last week in the wake of the European Central Bank's larger-than-expected stimulus package.
At 15:25 GMT, the rand was trading at 11.4495 to the greenback, down 0.25% from Friday's close in New York.
Government bonds weakened alongside the currency, with the yield on the heavily traded instrument due in 2026 adding 4.5 basis points at 7.215%, off last week's 20 month lows.
Cash-strapped Eskom slashed 2 000MW from the grid on Monday, implementing what it called "Stage 2 load shedding" in a bid to prevent demand from exceeding its capacity to keep the lights on.
SA's nagging power crunch and other long standing structural weaknesses, including a yawning current account deficit, would likely hinder the rand's performance this year, RBS said in a note.
"As a net result of these factors, we expect dollar/rand to move gradually higher, reaching out to 12.50 over the next 12 months," it said.
In the more immediate term, traders and investors awaited SA's interest rate decision on Thursday, with all 37 economists surveyed by Reuters predicting the Reserve Bank would hold interest rates at 5.75%.
