BLBG:Rand Gains Second Day Against Dollar as Labor Protests Ease
The rand gained for a second day after strikes in the platinum mining and agricultural industries ended, easing investor concern that labor unrest will worsen.
South Africa’s currency gained less than 0.1 percent to 8.7966 a dollar by 9:37 a.m. in Johannesburg. Yields on benchmark 10.5 percent bonds due December 2026 were unchanged at 7.16 percent after rising three basis points, or 0.03 percentage point, yesterday.
Anglo American Platinum Ltd., the biggest producer of the precious metal, said employees returned to work today at operations in Rustenburg and north of Pilanesberg in South Africa after a strike over plans to idle mines and cut 14,000 jobs. Most striking farmworkers in the Western Cape province agreed to suspend their labor action for a week to allow further wage negotiations to take place, the country’s largest labor group said yesterday.
“The endless rand weakness may be ending,” John Cairns and Josina Solomons, currency strategists at Rand Merchant Bank in Johannesburg, said in e-mailed comments. “The immediate risk seems to be further industrial action but there is nothing obvious that could drive negative headlines today.”
Shooting Star
The rand has declined 3.6 percent this year after Fitch Ratings cut the nation’s credit rating and on concern the current-account shortfall will widen as the strikes curb exports.
Metals and other minerals accounted for 61 percent of South Africa’s exports in the first 11 months of 2012, according to government data. The trade deficit in the same period was 112.7 billion rand ($13 billion), more than six times bigger than a year earlier.
The rand also gained after technical indicators suggested the currency’s decline had gone too far, according to Judy Padayachee, a Johannesburg-based analyst at Absa Group Ltd.
The rand posted a so-called shooting star pattern yesterday, an sign that it is set for a rebound, Padayachee wrote in a note e-mailed to clients today. A shooting star pattern occurs when a security’s opening, low and closing price are similar.
“We believe that the correction we have been looking for has a strong case,” Padayachee wrote. The rand may advance to 8.67 per dollar “in the near term”, she added.
In technical analysis, investors and analysts study charts of trading patterns to forecast changes in a security, commodity, currency or index.
To contact the reporter on this story: Robert Brand in Cape Town at rbrand9@bloomberg.net
To contact the editor responsible for this story: Vernon Wessels at vwessels@bloomberg.net
