News Column

Rand plummets past 11 to dollar

January 25, 2014

The rand, weighed down by fears of strike violence in the mines, weakened past the key level of 11 to the dollar yesterday, but analysts said it was unlikely to fall further. It breached the psychologically important 11 mark on Thursday, the first day of a strike at the country's platinum mines for higher wages by the Association of Mineworkers and Construction Union (Amcu). Investors fear a repeat of the violence that ended in over 30 miners being shot by police at Lonmin's Marikana mine last year. The Amcu strike has so far been peaceful but any violent outbreak would probably push the currency to its weakest in six years. In the morning, the rand was down 0.2 percent on its previous close in New York , to 11.0200/dollar . Having finally broken through the 11 level which had been threatening for two weeks, the dollar/rand rate is likely to dip before a continuation of the up-trend. "Now that the psychological 11.00 rand /dollar handle has been breached, exporters and rand bears might want to temporarily book some profits into the weekend," analysts at Absa Capital said. The government was due to broker talks with Amcu and the world's top three platinum-producing companies at the weekend to try to resolve the strike. Yields on government bonds were slightly higher as they tracked the weakness in the rand. The 2026 benchmark yield rose 1.5 basis points to 8.51 percent, while the 2015 note climbed 2.5 basis points to 6.39 percent. - Reuters Weekend Argus

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Source: Weekend Argus (South Africa)

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