Rand extends worst currency slide this month amid labour unrest
The rand weakened against the dollar, extending this month’s worst drop among major currencies, on concern labour disputes at platinum mines will weigh on South Africa’s current-account deficit.
About 7 000 workers continued a strike that started on November 3 at Northam Platinum's biggest mine, the National Union of Mineworkers said. Pay talks continue at three other platinum mines that produce more than 70% of the world's output.
South Africa needs foreign investment to plug a current-account shortfall that may average 6.5% of economic output this year, according to government estimates. "The rand remains a victim of poor local fundamentals as well as the mining labour unions," Mohammed Nalla, head of strategic research at Nedbank Group, said in e-mailed comments.
Labour disputes do "little to instill confidence in the already faltering economy", he said.
The rand dropped 0.5%to 10.18 per dollar as of 11.11am in Johannesburg on Tuesday, bringing its decline this month to 1.4%. Yields on bonds due December 2026 dropped one basis point, or 0.01 percentage point, to 8.09%.
South Africa’s currency will probably trade between 10.05 and 10.25 per dollar on Tuesday, Nalla wrote.
A sustained decline above 10.20 per dollar may trigger a slump to 10.50, he said.
Foreign investors sold a net R977-million of South African bonds and R436-million of stocks on Monday, according to JSE data. – Bloomberg