South Africa’s rand weakened to a 4 1/2-year low as strikes spread across the continent’s biggest economy and the U.S. and its allies moved closer to attacking Syria, fanning concern capital outflows will accelerate.
South Africa may face strikes involving as many as 335,000 workers after deadlocks in wage talks between employers and the country’s biggest labor unions spread to gas stations and car dealerships. The U.S., France and the U.K. are considering limited military action against Syria after concluding the regime used chemical weapons against civilians. The tension has worsened a rout that’s seen global funds pull out of emerging-markets on bets the Federal Reserve will pare stimulus.
“While all emerging markets remain under pressure, the rand has the additional pressure of the possibility of wide spread and significant labor action,” Mohammed Nalla, head of strategic research at Nedbank Group Ltd., said in an e-mailed note to clients today.
The currency fell as much as 1.2 percent to 10.5096 per dollar, the weakest intraday level since March 2009. It was trading 0.8 percent lower at 10.4684 per dollar as of 8:03 a.m. in Johannesburg, extending losses this year to 19 percent, the worst of 16 major currencies tracked by Bloomberg. Yields on 10-year bonds increased 4 basis points, or 0.04 percentage point, to 8.36 percent after jumping 10 basis points yesterday.
The spot price of Brent crude oil jumped 2.3 percent to $116.99 per barrel, the highest level since Feb. 19 for the generic contract. South Africa imports 70 percent of its oil needs. Foreign investors have sold a net 1.68 billion rand ($161 million) of bonds this month, according to JSE Ltd. data.
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