JOHANNESBURG (Reuters) – South Africa’s rand weakened against the dollar on Monday after flirting with a month-low as a strike by over 200,000 engineering sector workers entered its second week and employees at Impala Platinum continued with a wild-cat strike.
The rand was trading at 10.7930 rand per dollar at 1531 GMT, 0.2 percent weaker than its New York close. Earlier, it traded near the 10.86 support level before firming marginally.
The strike by NUMSA, South Africa’s largest union, looks set to drag on with wage talks over demands for a pay hike of up to 15 percent scheduled to take place on Tuesday.
An unrelated work-stoppage rocked Impala Platinum’s Morula operation on Friday, as workers demanded a wage deal similar to the one that ended a crippling 5-month stoppage at Lonmin, Anglo American Platinum and Impala’s operations in Rustenburg.
Pressure on the rand is also coming from a resurgent U.S. economy and indications that the Federal Reserve could up interest rates by the first quarter of 2015, drawing investors away from an ailing South Africa.
“It’s a combination of factors that add up to rand weakness,” said Marten Banninga, head of bond trading at World Wide Capital Securities. “The strike has been priced into the rand, but one must also look at the strengthening dollar.”
Banninga also said that the chances of the rand slipping below 10.86 and toward the 11.00 rand mark were increasing although the currency was holding around 10.77.
Government bonds were weaker, with the yields on both the paper due next year and the longer issue due in 2026 adding 3 basis points to 6.770 percent and 8.425 percent respectively.
