Rand Weakens as South Africa Inflation Climbs Before Mine Strike

The rand weakened against the dollar after inflation accelerated for the first time in four months in December and before a strike in South Africa’s platinum mining industry that may dent exports.

Consumer prices rose 5.4 percent from 5.3 percent the month before, Statistics South Africa said today. The median estimate of 23 economists in a Bloomberg survey was 5.6 percent. The South African Reserve Bank will leave its policy rate unchanged on Jan. 29, according to all 17 economists in a Bloomberg survey. Workers at Impala Platinum Ltd. and Anglo American Platinum Ltd. are due to start a strike tomorrow, according to their labor group.

“The Reserve Bank is obviously concerned about the impact of the weaker exchange rate on inflation,” Kevin Lings, chief economist at Stanlib Asset Management, said in an e-mail. “But given the weakening domestic economy they are expected to keep interest rates on hold during 2014.”

The rand weakened 0.3 percent to 10.8598 per dollar by 4:59 p.m. in Johannesburg. Yields on rand bonds due December 2026 were little changed at 8.39 percent.

The central bank, which left its benchmark repurchase rate at 5 percent since a surprise 50 basis-point cut in July, has said it won’t raise interest rates to support the rand, though it would act to keep inflation within its 3 percent to 6 percent target band.

The Association of Mineworkers and Construction Union will proceed tomorrow with a strike at the world’s biggest platinum companies, while a court delayed ruling on a request by the Chamber of Mines to block a gold-industry strike.

Foreign investors sold a net 1.1 billion rand ($102 million) of South African bonds on Jan. 17, bringing outflows this month to 5.63 billion rand, according to JSE Ltd. data.

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