--Rand strengthens as hopes rise of gold-mine strike accord
--But analysts warn move may not be sustainable
By Alexandra Fletcher
The battered South African rand made a tentative recovery
Wednesday after reports suggested a pay deal might be close between
the country's gold-mine owners and striking workers, after months
of industrial and sometimes violent unrest.
But the gains were clipped as news emerged that a final
agreement hadn't yet been reached and as investors took note of the
industrial unrest still plaguing other parts of the South African
economy.
Having depreciated Monday to its weakest level in roughly three
years against the dollar and euro, the rand clambered to its
strongest level in five days after the Chamber of Mines
representing Gold Fields Ltd. (GFI.JO), AngloGold Ashanti Ltd.
(ANG.JO) and Harmony Gold Mining Co. (HAR.JO) put forward a series
of pay deals to help end the strike.
The union representing the miners is expected to say Thursday
whether its members have accepted the deal, a chamber spokeswoman
said, contradicting an earlier report by Agence France Presse that
suggested a deal had already been agreed.
The dollar and euro eased in early European trade to as low as
ZAR8.6421 and ZAR11.1269, respectively, having raced to as high as
ZAR8.9940 and ZAR11.6548 on Monday.
However, analysts warned that the rand's latest move reflected
the currency's volatile nature rather than offering definitive
proof of a new improved trend.
"The move lower in the dollar against the rand this morning is
more of a tactical move," said Murat Toprak, an emerging market
currency strategist at HSBC Holdings PLC in London.
"The dollar was way overbought against the rand but the news of
the pay deal at the gold mines has provided the opportunity to
[sell it]. But does that mean the downtrend is sustainable? I'm not
so sure," he said.
With the central bank forecasting a slowdown in economic growth
to 2.6% this year from 3.1% in 2011--compared with the 7% growth
that officials say they need to cut into an unemployment rate of
almost 25%--the rand remained susceptible to another swing lower,
analysts warned.
"The rand is very overvalued at the moment--we'd say by as much
as 10%--given the state of the economy, the current account deficit
and the fact that strikes have spread to other industries," said
Neil Shearing, chief emerging markets strategist at Capital
Economics in London.
Talks between employers and unions representing more than 40,000
truck drivers broke down Tuesday, extending a strike that has left
some grocery stores and gas stations in Johannesburg without
supplies.
Elsewhere, more than 190,000 police officers, garbage collectors
and other municipal workers have said they could walk off the job
as soon as Thursday if local governments don't meet their pay
demands.
At 0945 GMT, the South African rand traded at ZAR8.7144 against
the dollar and ZAR11.2040 against the euro.
Write to Alexandra Fletcher at
alexandra.fletcher@dowjones.com