Rand weaker ahead of strikes

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NewRandMoney Reuters.

Johannesburg - South Africa's rand weakened against the dollar early on Wednesday with investors bracing for inflation data later in the day and the start of strike action in the mines on Thursday.

At 08:43 SA time, the rand was down 0.25 percent at 10.8500/dollar, from a 10.8240 close in New York on Tuesday and within the previous day's range.

Statistics South Africa will release December inflation numbers at 10:00 SA time.

Expectations of a rise in price pressures has helped to push closer the forecast of when the central bank may hike interest rates this year.

Economists polled by Reuters see CPI at 5.5 percent year-on-year, from 5.3 percent in November.

The rand, which hit five-year lows last week, is adding pressure to inflation, along with rising food and petrol prices.

“Even if CPI does surprise to the upside, rand bulls are unlikely to get too constructive about the rand, in light of this week's planned strikes in the platinum sector and the possibility of some unprotected strikes within the gold sector,” analysts at Absa Capital said in a note.

Members of the South African Association of Mineworkers and Construction Union are planning to down tools across the platinum and gold sectors on Thursday.

The rand has so far taken the news in its stride, but any flares of violence are likely to see it sold off quickly.

Yields on government bonds were up two basis points at 8.405 percent on the benchmark 2026 issue and 6.32 percent on the 2015 note. - Reuters



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