Rand gains on hope of platinum strike endingComment on this story
Cape Town - South Africa’s rand gained for the first time in four days and bonds advanced after a labour union accepted a wage offer from platinum companies, raising the prospect of an end to the 20-week strike.
The rand gained as much as 0.7 percent, and traded 0.5 percent stronger at 10.6961 per dollar by 2:09 p.m. in Johannesburg.
Yields on government bonds due December 2026 dropped eight basis points to 8.38 percent.
An agreement in principle on wages and employment conditions has been reached with leaders of the Association of Mineworkers and Construction, according to a statement from Impala Platinum, the world’s second-biggest producer, Anglo American Platinum and Lonmin.
The Amcu is canvassing its members’ opinions.
The deal comes a day before Standard & Poor’s and Fitch Ratings announce decisions on the nation’s creditworthiness.
“It seems like Amcu is happy to accept the offer, and that’s certainly positive for markets, though the big news is still tomorrow,” Deon Kohlmeyer, head of fixed-income trading at FirstRand, said by phone from Johannesburg.
More than 70,000 members of the union have been on a strike over pay since January 23, forgoing 9.9 billion rand in wages and costing the producers 22.1 billion rand in revenue.
S&P cited labour tensions and slowing growth among reasons for retaining its negative outlook on South Africa’s debt in December.
The rand has declined 3.1 percent in the past month as investors anticipate a rating cut that may boost the nation’s borrowing costs.
S&P will probably cut the rating to BBB- from BBB, while Fitch may change its outlook to negative from positive, according to Rand Rand Merchant Bank, a unit of FirstRand. - Bloomberg News