Pound Sterling to South African Rand – Exchange Rate forecast to rise as platinum producers reject wage demands

Pound to South African Rand exchange rate chart

The South African Rand recovered some of the losses it sustained at the start of the week and firmed against the Pound and other major peers as demand for riskier assets improved in the wake of waning tensions regarding Ukraine.

At the start of the week the Rand had been one of the worst affected currencies as investors were spooked by the prospect of war between Ukraine and Russia. Sentiment towards emerging market currencies was already fragile and the prospect of a conflict sent those currencies tumbling further.

Sentiment improved on Tuesday after Russian President Vladimir said that he did not want war and that force would only be used as a last resort.

Despite the rise the Rand looks set to falter and fall as a strike in South Africa’s platinum mining sector dragged on for a sixth week.

The Amcu union, which represents tens of thousands of platinum workers, had on Tuesday appeared to soften their position, saying their hoped-for wage demand could be spread over three years.

“The 12,500 R minimum monthly wage can now be achieved over three years, not at once. We are not reducing our demands. Our move is meant to give the employers a breather,” said AMCU President Joseph Mathunjwa.

The platinum producers refused a revised wage demand from the unions which raises the possibility for the strikes to continue. Anglo American Platinum, Impala Platinum and Lonmin all refused saying; “Our proposed offer, tabled on January 29, and which starts with a 9% increase at the lowest level, is already significantly above the inflation rate.”