Rand Weakens as Yields Rise to 7-Week High After Murder at Mine

The rand weakened and South African bond yields rose to a seven-week high after the death of a worker at Lonmin Plc’s Marikana mine, almost a year after at least 44 died in violence at the operation, spooked investors.

South African police are investigating a murder yesterday near a shaft owned by Lonmin, the world’s third-largest producer of platinum. A judicial probe into deaths at the mine, including 34 that were killed when police dispersed protesters on Aug. 16, has been halted by a lack of funding for victims to pay for lawyers.

“If the killing hadn’t been at Marikana and almost exactly one year after the multi-death tragedy, it would probably have been ignored,” John Cairns, a currency strategist at FirstRand Ltd.’s Rand Merchant Bank unit, wrote in an e-mailed note today.

The rand lost 15 percent this year, the worst performer against the dollar among 16 major currencies tracked by Bloomberg. It weakened 0.9 percent to 9.9804 per dollar as of 5:43 p.m. in Johannesburg, its biggest one-day decline in a week. Yields on rand-denominated government bonds due December 2026 rose 12 basis points, or 0.12 percentage point, to 8.30 percent, the highest since June 24 on a closing basis.

Wage talks between labor groups and gold producers started last month with a proposed four-percent increase in basic pay that was rejected by unions. Coal workers yesterday declared a dispute with employers, including Anglo American Plc and Exxaro Resources Ltd., after rebuffing a seven-percent offer. Inflation in South Africa, which relies on mineral exports for at least 50 percent of its foreign-trade earnings, slowed to 5.5 percent in June from 5.6 percent the previous month.

Fighting Inflation

South Africa has the world’s largest known reserves of platinum and chrome and is the fifth-biggest producer of gold. Platinum rose 0.8 percent to $1,507 per ounce, an increase of 4.7 percent this month. The spot price of gold declined 0.1 percent to $1,336.40 per ounce, paring its gain to 0.9 percent.

Bond prices also slumped after South African Reserve Bank Deputy Governor Daniel Mminele said yesterday that the central bank will act to ensure that inflation does not breach the upper end of its target band for a prolonged period. The bank expects inflation to average 5.9 percent this year and to exceed its target temporarily in the third quarter, when it will average 6.3 percent.

Foreigners were net buyers of 1.9 billion rand ($191 million) of South African bonds yesterday, according to data from the Johannesburg Stock Exchange.

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