South African Rand Declines First Day in Three as Strikes SpreadRobert Brand
The rand weakened for the first time in three days as workers at South Africa’s largest construction companies and its state-owned airline began strikes, extending labor disputes beyond gold mines and automaking.
About 90,000 workers in the construction industry downed tools after wage talks deadlocked, while 600 technical staff at airline South African Airways also began a strike. South Africa has been wracked by labor turmoil since last year, undermining growth in the continent’s biggest economy. Gross domestic product probably expanded an annualized 3.3 percent in the second quarter from 0.9 percent the previous three months, a report may show tomorrow, according to the median estimate in a Bloomberg survey of economists.
Labor unrest “can have devastating consequences for exports and diminish foreign investors’ appetite to invest in South Africa,” Bruce Donald, a currency strategist at Standard Bank Group Ltd. in Johannesburg, said in a note.
The currency depreciated 0.8 percent to 10.3247 per dollar as of 6:03 p.m. in Johannesburg. Yields on benchmark 10.5 percent bonds due December 2026 were unchanged at 8.51 percent. The rand earlier gained as much as 0.4 percent after U.S. durable-goods orders fell more than forecast in July, casting doubt on Federal Reserve plans to cut monetary stimulus that drove demand for emerging-market assets.
Foreign investors sold a net 2.01 billion rand ($197 million) of South African bonds last week, according to JSE Ltd. data.