The South African Rand tumbled by more than 1% against the Pound during Tuesday’s session as investors flocked to safe havens as fears grow that a strike begun on Sunday at a Northam Platinum Ltd mine could spread to other mines which together produce more than 70% of the world’s entire supply of the precious metal.
The mining sector has proven to be a major issue for the South African economy as since 2012 miners have been fighting for higher wages and better working conditions. Strikes have occurred up and down the country and clashes between strikers and security personnel have resulted in the deaths of 50 people.
Uncertainty in the sector has damaged confidence in the economy and has increased expectations that this latest bout of strike action will further negatively impact the nation’s already huge current account deficit.
Also weighing upon the Rand is increasing concerns that a decision by the South African government to not renew treaties made during the apartheid years could negatively impact on trade with Europe.
“The fragility of the rand implies an on-going erosion of real return through high inflation while at the same time there is a need to consider the credit ratings risk that the South African government faces, this credit risk is entrenched through continued strike action and more recently the failure by government to allay concern around the cancellation of its investment treaties with major EU countries,” Tradition Analytics wrote in a note.
Against the US Dollar the Rand made its biggest decline in a month.
Current South African (ZAR) Exchange Rates:
The US Dollar/South African Rand Exchange Rate is currently in the region of: 10.1849
The Pound Sterling/South African Rand Exchange Rate is currently in the region of: 16.3549
The Euro/South African Rand Exchange Rate is currently in the region of: 13.7578
The Australian Dollar/South African Rand Exchange Rate is currently in the region of: 9.6647
The New Zealand Dollar/South African Rand Exchange Rate is currently in the region of 8.4595
The Canadian Dollar/South African Rand Exchange Rate is currently trading in the region of 9.7615
(Correct as of 11:00 am GMT)
Comments are closed.