The rand gained most among emerging-market currencies and bond yields fell as talks between platinum miners and striking workers boosted confidence in an industry that is South Africa’s biggest foreign-currency earner.
The rand advanced as much as 0.7 percent and traded 0.4 percent stronger at 8.2337 per dollar as of 3:30 p.m. in Johannesburg, the best performance out of more than 25 emerging-market currencies monitored by Bloomberg. Yields on 6.75 percent bonds due 2021 dropped 11 basis points, or 0.11 percentage point, to 6.67 percent.
Workers started returning today to some platinum mines after police, supported by the army, disarmed striking miners to prevent a repeat of clashes that killed 45 people at Lonmin Plc’s Marikana mine last month. Workers at Lonmin cut their pay demands as talks with management continued. At the Rasimone platinum mine, jointly owned by Anglo American Platinum Ltd. and Royal Bafokeng Platinum Ltd., the situation was “quiet” after police arrested 42 people for public violence yesterday.
“News flow surrounding the labor unrest has turned slightly more positive,” Theuns de Wet, head of fixed-income research at Rand Merchant Bank in Johannesburg, wrote in e-mailed comments. “The underlying macro-economic environment remains bond-bullish, with low growth, contained inflation and easy monetary policy. If the unrest in the mining sector continues to settle down, bonds should trade stronger.”
Mining accounts for 9 percent of South Africa’s gross domestic product and 20 percent of its export earnings, according to government data.
The consumer inflation rate probably rose to 5 percent in August from 4.9 percent in the previous month, according to the median estimate of 20 economists in a Bloomberg survey. The central bank’s mandate is to keep inflation in a 3 percent to 6 percent target range.
The Monetary Policy Committee will probably leave its benchmark repo rate unchanged on Sept. 20, according to all but one of 20 economists in a Bloomberg survey. The MPC unexpectedly cut the repo rate by 50 basis points on July 19 to 5 percent to bolster growth in Africa’s largest economy.
The rand also advanced as appetite for riskier assets improved after Spain’s borrowing costs dropped at a bill auction, bolstering confidence in plans to solve Europe’s debt crisis.
Spain’s borrowing costs fell from the previous auction even as the impact of European Central Bank President Mario Draghi’s proposal to buy bonds of countries that submit to rescue programs started to fade. Spanish Prime Minister Mariano Rajoy has delayed making a decision on whether to trigger the mechanism that Draghi announced two weeks ago, prompting an increase in 10-year yields yesterday to more than 6 percent.
“A continued risk-on bias in international markets should take some of the pressure off the rand over the near term,” Bruce Donald, a strategist at Standard Bank Group Ltd., wrote in e-mailed comments. “The rand remains highly sensitive to fluctuations in global risk appetite.”