Rand Extends Slide as Coal Strike Fuels Current-Account Concern

The rand declined, extending the worst slide this year among major emerging-market currencies, on concern labor disputes at South African mines will cut exports, fueling a current-account deficit near the widest in four years.

The rand slipped as much as 0.9 percent and traded 0.4 percent weaker at 9.1282 per dollar as of 5:10 p.m. in Johannesburg. It has declined 7.2 percent this year, the most out of more than 20 major emerging-market currencies monitored by Bloomberg. Yields on benchmark 10.5 percent bonds due December 2026 advanced one basis point, or 0.01 percentage point, to 7.38 percent.

South Africa’s current-account deficit probably contracted to 6.3 percent of gross domestic product in the fourth quarter, from 6.4 percent in the previous three months, a report tomorrow will show, according to the median estimate of 10 economists in a Bloomberg survey. Strikes at three of Exxaro Resources Ltd. (EXX)’s South African coal mines that started last week have spread to two more operations, according to the National Union of Mineworkers.

“The market remains highly sensitive” to news about labor disputes at South African mines including Exxaro, John Cairns, a currency strategist at Rand Merchant Bank in Johannesburg, said in e-mailed comments. “The focus on the local front this week will be more on the underlying structural problem: the large current-account deficit.”

Mining production, which accounts for 53 percent of the nation’s exports, probably fell 4.2 percent in the year through January, a separate report may show on March 14. South Africa posted a record monthly trade deficit in January.

The rand’s decline today pared gains made on March 8 after Reserve Bank Governor Gill Marcus said the currency’s slump beyond 9 per dollar was overdone. The rand would, over time, “retrace back to a more reasonable level”, she said in an interview with Bloomberg TV.

“Simple verbal intervention is unlikely to support an extended recovery,” Quinten Bertenshaw, a Johannesburg-based analyst at ETM Analytics, said in e-mailed comments today.

To contact the reporter on this story: Robert Brand in Cape Town at rbrand9@bloomberg.net

To contact the editor responsible for this story: Vernon Wessels at vwessels@bloomberg.net

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