Johannesburg - South Africa's rand rose against the dollar on Tuesday, recovering from earlier lows as general bullishness on equity markets offset the dampener of news that miners at platinum producer Lonmin went on strike.
The latest strike could leaves the rand vulnerable to a sell-off. The currency was hit hard at the end of 2012 by investors worried about labour strife and violence in the mining sector.
The local currency earlier hit a session low of 9.1173 to the greenback after world's third largest platinum producer Lonmin said workers had gone on an illegal boycott at its mine in Marikana.
Marikana was the site of violent clashes last year, where police shot dead 34 miners.
By 15h31 GMT the rand had recovered to 9.0517/dollar, up 0.31 percent from Monday's close at 9.08.
“You just have to look at the sentiment in the equity markets which had quite a decent run today ... everybody's happy and willing to put on risk again and that's benefiting the rand,” said Ion de Vleeschauwer, chief dealer at Bidvest Bank.
“It's just global stuff, general stock market bullishness all around.”
South Africa's benchmark Top-40 stock index and the All-share index each closed nearly 2 percent higher as investors cheered a record high on Wall Street.
Government bonds were also firmer and yields inversely retreated, with the 2026 paper closing 5 basis points lower at 7.325 percent while the paper due in 2015 was down 2 basis points at 5.31 percent.
The higher bond prices followed a well-bid weekly debt auction where the Treasury sold R2.1-billion in total of the 2026, 2041 and 2023 paper, with bid-to-cover rations of above 3.0.
Local economic fundamentals still favour a weaker rand though, with economic growth seen remaining subdued for the next three years while the current account deficit is seen holding around six percent of GDP. - Reuters