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Johannesburg - The rand continued to slide on Tuesday morning as ongoing unrest in the mining sector and fears that violence might spread to wage negotiations in other sectors saw foreign investors lose their rand appetite.
“We’ve obviously got a bit of momentum going which has triggered a couple of levels and without any positive news on the horizon things don’t look good‚” said Ockert van Niekerk‚ head of trading at PSG. “Apart from the mining sector unrest‚ the strike at Mercedes Benz has also played a part in shaking investor confidence.”
Over the weekend the National Union of Mineworkers demanded a 60% wage increase for entry-level workers.
“Until we see some step in from government the market is going to be very rand negative and with the monetary policy committee meeting going on and consumer inflation figures out on Wednesday it’s definitely not over for the week‚” he said.
There has been speculation that the Reserve Bank may follow the lead of other central banks such as the Reserve Bank of Australia and lower interest rates to boost growth prospects‚ but a weaker rand is likely to put upward pressure on inflation and limit the Bank’s options.
“With the rand at this level it will eliminate any possibility of a rate cut‚” said Van Niekerk.
At 11:26 the rand was bid at R9.5226/$ from R9.4313 at Monday’s close and R9.4002 at Friday’s close.
The local currency was bid at R12.2647/€ from its previous close of R12.1655 and was at R14.4454 against sterling from R14.3985 at its previous close.
The euro was bid at $1.2883 from $1.2897 at Monday’s close.
