Rand Declines Due to Violence at the South African Mining Centers

South African economy is again suffering because of the violence at the mining centers. Last year, the economy had seen huge troubles because of the same and even in this year, the clashes between the labor unions at an Anglo American Platinum mine and police is causing decline in Rand, the major currency of South Africa. Rand has actually decreased for 3rd straight day now.
South Africa, which is the biggest economy of the continent declined by 0.6% and is currently priced at 8.9741 per USD. At one point of time in the day, the currency was trading at 8.9087 per greenback. The yields on the benchmark 10.5% bonds which are due in December, 2026 experienced a drop of 4 basis points and are currently at 7.28%.

During the fighting at the Amplats’s Siphumelele mine near Rustenburg, 3 security guards got injured, whereas, 12 of the workers were shot with rubber bullets. During the attacks, different sharp objects such as machetes were used, as far as police report is concerned. According to spokeswoman of the company, Mpumi Sithole, situation should be under control by the end of tomorrow and she expects that workers will be back in the mine soon. Incidentally, if this happens in reality, the economists of the country will have a sigh of relief as this African country will, for the time being, not be under influence of any sort of negative sentiment.

According to John Cairns, who works as a currency strategist of Rand Merchant Bank, the labor unrest in South Africa is most probably going to be a feature of the economic landscape of the country, as far as the foreseeable future is concerned. He added further that the current scenario will continue to have its presence felt when the outlook for the exchange rate will be determined.

Incidentally, in last year, several strikes were held in mines across the entire country. Around 34 protestors were shot by the Police at the Lonmin Plc.’s Marikana platinum mine and as a result, several gold and platinum mines got closed. This violence played a significant role in declining the Gross Domestic Product of South Africa by 0.5%. This reduced Gross Domestic Product of South Africa got the credit rating of the country to a lower zone and the data was released by the National Treasury.