Rand eases as strike talks fail

The currency of Africa’s second largest economy weakened against the dollar on Wednesday, as a strike by 220,000 workers in South Africa’s metals sector entered its third week and looked unlikely to be resolved soon.

The rand slipped 0.2 percent from its close in New York to R10.7300 at 07:55.

The local unit made modest gains against the US currency in the previous session buoyed by strong demand for government bonds, before retreating towards R10.75, a recent resistance level.

“Technically the rand is still within the longer term bull trend. However yesterday’s move back below R10.6500 should delay the expected move to R10.96 to R11.00,” Standard Bank dealer Warrick Butler said in market note.

Last Tuesday, employers in the metals and engineering sector withdrew their offer of a 10 percent annual wage increase after National Union of Metalworkers of South Africa (Numsa) maintained its demand for increases of between 12 percent and 15 percent.

The strike has disrupted the supply of components to automobile makers, pushing Toyota, GM and Ford to halt production at their assembly plants.

In fixed income, government bonds were broadly flat with the paper due in 2015, and the paper maturing in 2026 both adding 1.5 basis points to yields of 6.67 percent and 8.27 percent, respectively.