The South African Rand has weakened beyond the psychologically key R10 /$ level and fallen to a five-week low after the currency extended losses it made over the weekend.
The currency’s decline has been caused by renewed fears over the possibility of labour strife in the country’s key mining and car industries.
On Monday workers downed tools at a Toyota factory as the auto sector began a nationwide strike over wages. Workers in many sectors are battling with their employers over pay. Several pay disputes have turned violent in the past.
Tensions are also running high in the mining sector following last week’s murder of a mine employee and the year anniversary of the Marikana mine massacre which saw 34 miners shot dead by security forces. The incident was the deadliest security incident since the end of the Apartheid in 1994.
The Rand is expected to coming under increasing pressure throughout the week as investors await the release of the latest policy minutes from the US Federal Reserve. If the minutes suggest that the Central Bank is planning to taper its monetary easing programme in September the Rand will weaken due to the impact the news will have on emerging market currencies.
Weak factory data out of China is also likely to negatively impact the currency.
“The other international headwind for the Rand to contend with this week will be Thursday’s Chinese PMI data as the reading is likely to remain well below the critical 50 level, which would imply that the manufacturing sector in South Africa’s leading export destination is still contracting. Any more negative headlines on the local wage negotiation front could also contribute to further Rand weakness” said Absa Capital.
The next piece of South African data due comes out on Wednesday when July’s consumer inflation data is released. A better-than-expected result could offer some support to the Rand.
Current South African (ZAR) Exchange Rates:
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The US Dollar/South African Rand Exchange Rate is currently in the region of: 10.1282 >
The Pound Sterling/South African Rand Exchange Rate is currently in the region of: 15.5902 >
The Euro/South African Rand Exchange Rate is currently in the region of: 13.5801 >
The Australian Dollar/South African Rand Exchange Rate is currently in the region of: 9.31 >
The New Zealand Dollar/South African Rand Exchange Rate is currently in the region of 8.2686 >
The Canadian Dollar/South African Rand Exchange Rate is currently trading in the region of 9.8464>
(Correct as of 12:25 pm GMT)
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