The rand depreciated for a second day, set for its first weekly decline in three, on speculation proposed job cuts by South Africa’s biggest platinum miner will spark labor unrest. Bond yields rose from record lows.
Anglo American Platinum Ltd (AMS) may announce today details of a plan to close shafts and fire workers as producers struggle with higher costs and falling metal prices, Business Day reported yesterday. Violent strikes last year cost South African miners as much as 15 billion rand ($1.7 billion) in revenue and contributed to the currency’s 5.1 percent slide in December.
“Local risks will increase today,” John Cairns, a currency strategist at Rand Merchant Bank in Johannesburg, said in e-mailed comments. “Anglo Platinum seems set to announce their long-awaited trend-setting retrenchment plan, which may trigger another bout of industrial action.”
South Africa’s currency weakened 0.3 percent, bringing its retreat this week to 1.7 percent, the most since the period ended April 19. Yields on benchmark 10.5 percent bonds due December 2026 rose six basis points, or 0.06 percentage point, to 6.66 percent, recovering from a record-low close yesterday.
Amplats, as the company is known, in January put proposals to idle four shafts and cut 14,000 jobs on hold after the government criticized its handling of the matter and threatened to revoke some mining licences. Impala Platinum Holdings Ltd. said on May 2 it is monitoring the viability of shafts that are producing at a loss. South Africa produces 77 percent of the world’s platinum.
Amplats will announce the outcome of its discussions with the government in the week starting May 6, the company said on April 30.
The rand also weakened on speculation the South African Reserve Bank is set to lower interest rates, reducing the currency’s yield advantage over the dollar. A contraction in manufacturing and mining output in March may spur the central bank to lower borrowing costs as soon as September, Cairns said.
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