Rand Declines First Week in 3 as Job Cuts Spark Strike ConcernRobert Brand
The rand depreciated for a second day, for the first weekly decline in three, as labor organizers said they will fight plans to cut jobs at South Africa’s biggest platinum miner. Bond yields rose from record lows.
The National Union of Mineworkers said it was prepared to strike against plans by Anglo American Platinum Ltd. to dismiss as many as 6,000 workers as it closes three shafts at its South African mines. 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.
“The market didn’t take any comfort” from the prospect of strike action to oppose the cuts, William van Rijn, a currency trader at Nedbank Group Ltd., said by phone from Johannesburg today. “You also saw commodity prices coming off this afternoon, which” added pressure on the rand, he said.
South Africa’s currency weakened 0.7 percent to 9.0935 per dollar as of 4:09 p.m. in Johannesburg, bringing its retreat this week to 2.1 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 6.65 percent, after a record-low close yesterday.
Amplats, as the company is known, scaled back planned losses after an earlier proposal to idle four shafts and cut 14,000 jobs was criticized by the government, which 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.
Standard & Poor’s GSCI Index of raw materials dropped for the first time in three days. Platinum fell as much as 1.6 percent, while gold declined 2 percent. The two metals account for 20 percent of South Africa’s exports, according to government data.
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, John Cairns, a currency strategist at Rand Merchant Bank in Johannesburg, said in e-mailed comments.