Rand Swings Between Gains and Losses Before Zuma’s Statement
The rand swung between gains and losses before President Jacob Zuma’s State of the Nation speech, amid concerns about social unrest, slowing growth and confrontations between government and business.
South Africa’s currency declined as much as 0.1 percent before paring losses. It traded at 8.8703 per dollar as of 9:52 a.m. in Johannesburg, little changed from yesterday’s New York close. Yields on benchmark 10.5 percent bonds due December 2026 rose three basis points, or 0.03 percentage point, to 7.32 percent.
The rand has weakened 4.5 percent this year, the third- biggest decline among 16 major currencies, amid the worst labor unrest since apartheid ended in 1994, protests by shantytown residents and three credit-rating downgrades. Zuma, 70, may announce new policies in his 7 p.m. speech in Cape Town to create jobs, improve education and speed up delivery of services to poor areas, according to Carmen Nel, a Cape Town-based analyst at Rand Merchant Bank.
“On balance, we think the statement will at least be neutral for the markets and could even be a slight positive surprise,” Nel said in e-mailed comments today. “Even so, there is still a lot of event risk for the markets.”
Since taking control of Africa’s largest economy in May 2009, Zuma has struggled to cut unemployment, today at almost 25 percent, and narrow one of the world’s largest income gaps between rich and poor. Discontent reached a climax in August, when about 34 protesters were killed in clashes with police at a Lonmin Plc platinum mine. People also died in two months of violence on farms that resulted in the daily minimum wage being increased this year by more than 50 percent to 105 rand ($12), threatening jobs.
The ruling African National Congress, after endorsing a 20- year plan to boost the economy and spurning calls in December to seize mines, has attacked Anglo American Platinum Ltd.’s proposal to fire as many as 14,000 miners and a FirstRand Ltd. advertising campaign highlighting government corruption.
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