Rand Gains Second Day as Gold Miners Move Closer to Wage DealRobert Brand
The rand strengthened for a second day, erasing an earlier decline, after gold producers moved closer to a wage settlement which may end a strike that has shut mines in Africa’s biggest economy.
The National Union of Mineworkers, which represents two-thirds of the nation’s 107,000 gold miners, said it will ask its members to consider a revised wage offer by the largest gold-mining companies. The rand gained even amid speculation an improvement in the U.S. economy will prompt the Federal Reserve to cut bond purchases as early as this month, damping demand for higher-yielding assets.
“The headlines about the strike are positive,” Michael Potgieter, a market analyst at ETM Analytics, said by phone from Johannesburg. “Persistent labor unrest remains a sentiment dampener and a structural risk to the local economy,” ETM analysts wrote in a note e-mailed earlier today.
The rand appreciated 0.3 percent to 10.2104 per dollar as of 5:04 p.m. in Johannesburg, rebounding from a 0.7 percent slump earlier. Yields on bonds due December 2026 were unchanged at 8.56 percent.
The stoppage at gold mines, which started on Sept. 3, may cost the South African gold industry about 349 million rand ($34 million) a day in revenue, with the total cost including lost wages and taxes reaching 597 million rand a day, the Chamber of Mines says. Gold accounts for about 5 percent of South Africa’s exports, according to government data.
Workers in the automotive, construction and aviation industries remain on strike.
Earlier, the rand declined on speculation rising employment and expansion in the U.S. service industry will prompt the Fed to taper its quantitative-easing policies. Growth in U.S. service industries unexpectedly accelerated in August as orders improved, showing further progress in the world’s biggest economy. The pickup followed the group’s report this week that showed manufacturing grew the most since June 2011.
The number of U.S. workers claiming unemployment benefits declined more than economists predicted last week, Labor Department data showed today, before the monthly payrolls report tomorrow and the Fed’s next meeting from Sept. 17-18.
“It is widely anticipated that the Fed will announce a slowdown in its asset purchases at either this meeting or their next meeting in December,” Walter de Wet, a Johannesburg-based analyst at Standard Bank Group Ltd., said in e-mailed comments.
Foreign investors sold a net 340 million rand of South African bonds and 1.41 billion rand of equities yesterday, according to JSE Ltd. data.