Rand touches 4-year lows against the dollar

2013-05-18 09:23

South Africa’s rand touched fresh four-year lows against the dollar and could weaken further towards technical support at 9.5 as labour strife in the mine sector weighs on sentiment.

The rand fell more than 1.2% to 9.4410 per dollar early in the session, the weakest it has been since April 2009, as tensions simmered at Anglo American Platinum over its plan to axe 6 000 jobs.

“We have recovered marginally from the worst levels of the day (due to) slightly greater interest this afternoon from some dollar sellers perhaps squaring up for the weekend, but overall the rand hasn’t performed well,” said William van Rijn, a trader at Nedbank.

Investors are still worried that a recent spate of strikes in the sector could trigger violence similar to that which killed more than 40 people last year, including 34 protesting miners shot dead by police.

The violence has dented sentiment towards South African assets, contributing towards a 9% tumble in the rand’s value against the greenback since the beginning of 2013.

“Unfortunately, any sort of industrial action in South Africa of late, especially in the mining sector, has led to a certain degree of bloodshed and that translates into a great degree of discomfort in the market,” van Rijn added.

Government bonds were little changed from their previous closing levels, with the yield for the benchmark 2026 paper edging up half a basis point to 6.84% while the 2015 issue added 1 basis point to 5.05%.

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