Johannesburg - South Africa's rand traded within sight of the previous day's multi-year lows against the dollar on Tuesday, with news that metalworkers are demanding a steep wage increase stoking fears of more strikes in Africa's biggest economy.
The rand was at 9.4610 to the greenback by 07h09 GMT, 0.21 percent softer than Monday's close of 9.4410.
The currency retreated from 9.4250 after a union official said the National Union of Metal Workers of South Africa was demanding a 20-percent wage increase for its members in the automotive sector.
Annual wage negotiations in Africa's biggest economy tend to kick off with very high wage demands that are then whittled down.
But foreign investors in particular are worried that the often-violent wage strikes that hit the mining sector in 2012 could fuel tensions in other sectors during this year's salary negotiating season, due to start shortly.
“We locals know this is how it works every year - we have some posturing then at some point common sense prevails. But this year we happen to be in focus and any little headline has a negative impact on the rand,” Rand Merchant Bank trader Ian Martin said.
“The area to watch is the lower 9.50's which is a big level and we'll struggle to break that for a while. On the day I guess we'll trade 9.39-47 with the risk of a top-side break out.”
Government bonds were little-changed from Monday's closing levels in a market that has priced in a “no change” stance on interest rates when the Reserve Bank concludes a policy meeting on Thursday.
The yield for the benchmark 2026 paper ticked up half a basis point to 6.94 percent while the shorter-dated paper due in 2015 dipped by the same margin to 5.11 percent. - Reuters