South African rand under strain as strikes drag on

Tue May 20, 2014 7:25am GMT
 

JOHANNESBURG (Reuters) - South Africa's rand was under pressure on Tuesday, tracking weaker Asian currencies due to political uncertainty in that region, while investors are increasingly worried about the impact of a protracted platinum sector strike on the local economy.

The rand was trading at 10.4125 versus the dollar by 0720 GMT, down 0.57 percent from where it closed the New York session on Monday.

"The rand underperformed its EM currency peers on Monday, which we believe is a function of South Africa's relatively challenging fundamentals, which include ongoing strike activity in the platinum sector," Barclays Africa said in a market note.

The strike, which started in January, has hit the operations of Lonmin, Anglo American Platinum and Impala Platinum, taking out 40 percent of global production of the precious metal. [ID:nL6N0O61D4]

Rand trading volumes were likely to be fairly light, in cautious trading ahead of local inflation data and the central bank's rates decision later this week, and minutes of the U.S. Federal Reserve's last policy meeting, Barclays Africa said.

Government bonds also weakened, with yields, which move inversely to the price, adding 5 basis points to 8.13 percent for the 2026 instrument and 4 basis points to 6.63 percent for the shorter-dated 2015 paper.

The hand of South African Reserve Bank Governor Gill Marcus is seen holding South Africa's  rand banknotes - which feature an image of former president Nelson Mandela on the front . REUTERS/Siphiwe Sibeko

Market Update

  • Africa
  • US
  • Europe
  • Asia
UK £ USD =1.3007
Euro USD =1.1206
Rand USD =0.0744