Johannesburg – The rand sank to a fresh four-week low against the dollar on Wednesday after trade union Amcu walked out of gold sector wage talks, raising fears of a potential mining strike.
By 17:30 GMT the rand had recovered some ground, only 0.61% softer to R12.5226/$, after sliding over 1% towards the key 12.80 technical support level.
"12.80 is the next support and if broken, would open up levels above 13.00 reasonably quickly," said Mohammed Nalla, head strategist at Nedbank.
Unions representing around 94 000 workers in the gold sector are asking for wage increases between 80 and 100%, but producers say the demands are unaffordable due to depressed prices and rising costs.
"The initial concern is that this will lead to something like what happened in the platinum strike," said Christie Viljoen of NKC African Economists, referring to the 5-month strike in 2014 that dragged the economy close to recession.
The rand has lost nearly 1.5% against the dollar this week and over 10% in the last 6 months, with contagion from China's equity rout set to further strain emerging markets.
Government bonds failed to benefit from global investor search for safe-haven assets, with the paper due in 2026 shedding flat at 8.255%.