Rand Hits 6-Week Low as Amplats Job-Cut Plan Fuels Labor Concern

Jan. 16 (Bloomberg) -- The rand retreated to its lowest in more than six weeks on concern plans by South Africa’s largest platinum producer to cut jobs could trigger further labor unrest in the country.

The rand depreciated as much as 0.7 percent to 8.8790 per dollar, the weakest level since Dec. 4, and traded 0.5 percent lower at 8.8579 as of 4:05 p.m. in Johannesburg. Yields on benchmark 10.5 percent bonds due December 2026 climbed for a second day, adding three basis points, or 0.03 percentage point, to 7.16 percent.

Anglo American Platinum Ltd. mineworkers walked out in protest over as many as 14,000 planned job cuts as South Africa’s government threatened to revoke licenses held by the company. Metals and other minerals accounted for 61 percent of South Africa’s exports in the first 11 months of 2012, according to government data. The trade deficit in the same period was 112.7 billion rand ($13 billion), more than six times bigger than a year earlier, as a wave of strikes in the mining and transport industries intensified.

“The Amplats news was negative” for the rand, John Cairns, a currency strategist at Rand Merchant Bank in Johannesburg, said in e-mailed comments. “The real worry is that the restructuring presages another round of labor problems and is a signal of mounting problems in the industry and the economy.”

Mining production contracted for a third straight month in November, declining by 4.5 percent, Statistics South Africa reported yesterday. Shipments of precious metals and stones slumped 15 percent in the first 11 months of 2012, while base-metals exports dropped 3.2 percent, even as total exports grew 1.4 percent, according to South African Revenue Service data.

Retail Sales

The rand pared losses after South Africa retail sales growth quickened for the first time in three months in November, signalling a recovery in consumer spending. Retail sales rose 3.4 percent from a year earlier, faster than the revised 0.9 percent pace in October and more than the median estimate of 1.5 percent in a Bloomberg survey of 12 economists.

“An upside surprise is always a good thing and it uplifts sentiment,” Gina Schoeman, an economist at Citigroup Inc. in London, said by phone.

To contact the reporter on this story: Stephen Gunnion in Johannesburg at sgunnion@bloomberg.net;

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