Rand breaches R11/$ level amid strikes

Johannesburg - The rand weakened more than 1% to the psychologically key R11/$ level on Thursday, its lowest since October 2008 when R49bn of capital was pulled out of the economy.

On the first day of strikes at platinum mines, the rand was at R10.9910/$ at 15:42 GMT, down 1.05% from Wednesday's New York close, after earlier touching 11.

Against the pound and the euro, the rand was around 2% weaker, at R18.2789/£ and R14.9689/€ respectively.  

Members of the Association of Mineworkers and Construction Union (Amcu) walked out at Anglo Platinum (Amplats) [JSE:AMS], Impala Platinum (Implats) [JSE:IMP] and Lonmin [JSE:LON] on Thursday, demanding hefty wage hikes their employers have said are "unaffordable and unrealistic."

The government has offered to mediate to end the dispute that threatens to squeeze an already struggling economy.  

Traders said it was inevitable the rand would breach 11 given negative sentiment over persistent labour strife.

"The strikes obviously (have) a big impact because that influences the sentiment, so everybody's scared that violence is going to break out again," said Bidvest Bank trader Ion de Vleeschauwer.

"As soon as there's violence with the labour issues, the sentiment will just go out the window."

Government bonds weakened with the rand, with yields on the 2026 government bond and 2015 issues each gaining 10 basis points to 8.495% and 6.365% respectively.

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