The South African Rand has strengthened for a second day against the US Dollar after striking workers from the nation’s key mining and farming sectors went back to work. The move has eased investor concerns that the nations labour problems will worsen.
Anglo Platinum, the biggest producer of Platinum in the world announced that employees have returned to work today at its operations in RustenBurg and Pilanesberg. The strikes were launched after the company announced that it would close idle mines and slash up to 14,000 jobs.
Putting pressure on the company was mining Minister Susan Shabangu who branded Anglo Platinum as ‘arrogant’ after it announced the job cuts. She told South African Radio that the company was breaching the law and added that it was endangering its mining license. Shares in Amplats fell 6.8% on the news on the Johannesburg Stock Exchange, while in London; Anglo American shares dropped 2.4%.
She added; “”The regulations says we need consultation, not on the basis of time-frames but on the basis of trying to find a solution for all of us. Amplats continues to be arrogant and undermining stakeholders… They’ve been playing games with us.” Susan Shabangu told the South African Broadcasting Corporation.”How do they expect us to participate… because they have finalised everything,” the minister added.
“The endless rand weakness may be ending,” claimed Josina Solomons, currency strategist 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.”
According to South Africa’s largest labour group, most of the striking farm workers in the Western Cape Province also agreed to return to work, suspending their actions for a week to allow further wage negotiations to take place.
So far this year the Rand has weakened by as much as 3.6%. The credit ratings cut by Fitch and concerns that the current-account shortfall will widen as strikes curbed exports. According to government data, 61% of the African nation’s exports were comprised of minerals and metals. As a result of the strikes the trade deficit in the same period was 112.7 billion rand ($13 billion), more than six times bigger than a year earlier.
Many investors and economists are predicting that the currency could see a strong rebound if the labour troubles are resolved.
The Pound to Rand exchange rate is currently trading at 14.0453
The Pound to US Dollar exchange rate is currently trading at 1.6016
The Pound to Euro exchange rate is currently trading at 1.1983
The Euro to US Dollar exchange rate is currently trading at 1.3363
The Euro to Pound exchange rate is currently trading at 0.8341
The Euro to Rand exchange rate is currently trading at 11.7505
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