South African rand gives up some gains as power firm announces blackouts

JOHANNESBURG (Reuters) - South Africa's rand gave up some of its earlier gains against the dollar on Thursday after utility Eskom said it would implement power cuts to ease pressure on its grid, adding to the gloomy outlook for the economy. Eskom, which has severe funding constraints, has already effected several rolling blackouts in recent weeks as its creaking generating infrastructure fails to meet demand. The power crunch has raised fears of another credit rating downgrade for Africa's most advanced but ailing economy next week when Fitch and Standard and Poor's release their latest reviews. "The Eskom story is worrying and far from rand-positive," a Johannesburg trader said. At 1554 GMT, the rand stood at 11.1830 against the dollar, up slightly from Wednesday's close at 11.2200 but off Thursday's session high of 11.1555. Government bonds were largely steady, with the yield for the benchmark paper due in 2026 dipping 1.5 basis points to 7.725 percent. The rand has lost 7 percent of its value against the dollar so far in 2014, with investor sentiment taking a knock earlier in the year when workers in the platinum mining and engineering sectors went on protracted strikes for higher wages. Nagging budget and current account deficits have added to the currency's vulnerability, particularly when global markets are volatile and investors dump emerging market assets seen as carrying higher risk.