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Rand Gains Second Day Against Dollar as Labor Protests Ease

The rand gained for a second day after strikes in the platinum mining and agricultural industries ended, easing investor concern that labor unrest in South Africa will worsen.

The currency appreciated 0.3 percent to 8.7763 a dollar by 3:23 p.m. in Johannesburg. Yields on benchmark 10.5 percent bonds due December 2026 climbed one basis point, or 0.01 percentage point, to 7.17 percent after rising three basis points yesterday.

Anglo American Platinum Ltd., the biggest producer of the precious metal, said employees returned to work today at operations in Rustenburg and north of Pilanesberg in South Africa after a strike over plans to idle mines and cut 14,000 jobs. Most striking farmworkers in the Western Cape province agreed to suspend industrial action for a week to allow further negotiations on wages, the country’s largest labor group said yesterday.

“The immediate risk seems to be further industrial action but there is nothing obvious that could drive negative headlines today,” John Cairns, a currency strategist at Rand Merchant Bank in Johannesburg, said in e-mailed comments. “Rand weakness may be ending.”

Shooting Star

The rand has weakened 3.6 percent this year after Fitch Ratings cut the nation’s credit rating and on concern the current-account deficit will widen as the strikes curb exports.

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 gap in the same period was 112.7 billion rand ($13 billion), more than six times bigger than a year earlier.

The rand also gained after technical indicators suggested the currency’s depreciation had gone too far, according to Judy Padayachee, a Johannesburg-based analyst at Absa Group Ltd.

The dollar-rand posted a so-called shooting star candletick pattern yesterday, an sign that it is set for a rebound, Padayachee wrote in a note e-mailed to clients today. Candlestick charts show an index or a security’s high, low, open and close each day. A shooting star formation emerges when securities that have been rising register an open, daily low, and close far from the session’s high.

“We believe that the correction we have been looking for has a strong case,” Padayachee wrote. The rand may advance to 8.67 per dollar “in the near term”, she added.

In technical analysis, investors and analysts study charts of trading patterns to forecast changes in a security, commodity, currency or index.

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