Rand down on euro as strike continues

THE RAND declined for a second day against the euro yesterday as unrest in the mining industry sapped investor confidence.

The rand retreated as much as 0.8 percent against the euro and was bid at R10.7768 at 5pm. Against the dollar, it was bid at R8.2058, almost 1c stronger than Friday’s bid.

Yields on 6.75 percent bonds due in 2021 dropped.

“Between our current account and the political backdrop and ensuing mining crisis, South Africa is not high on investors’ radar, hampering portfolio inflows,” said Brigid Taylor, the head of institutional flow sales at Nedbank.

“The mining disruption will negatively impact gross domestic product, as well as tax revenues, which bodes ill for continued bond support from foreigners,” she said.

Finance Minister Pravin Gordhan said the mining labour violence might curb growth, production and exports, and would likely widen the current account deficit and deter investment, which would be “extremely damaging”.

The spreading unrest comes as South Africa posts its biggest current account deficit in almost four years. Foreign investors sold a net R4.5 billion of South African stocks and bonds last week, according JSE data.

The gap in the current account grew to 6.4 percent of gross domestic product in the second quarter.