South African Rand to Dollar Exchange Rate (ZAR USD) Tumbles on strike fears

August 28, 2013 - Written by James Fuller

STORY LINK South African Rand to Dollar Exchange Rate (ZAR USD) Tumbles on strike fears

The South African Rand to Dollar exchange rate (ZAR/USD) has tumbled to a four-year low after it extended its losses as the global sell-off of emerging market assets continues.

The Rand to Dollar exchange rate is currently trading at 0.0961 ZARUSD. The inverse Dollar to Rand exchange rate is 10.3999 USD/ZAR.

The Rand exchange rate has been struggling for months due to investors choosing to pull out of emerging market currencies on the basis that the US Federal Reserve could begin to taper its quantitative easing policy by as soon as September. Now as tensions build over a possible conflict with Syria the speed of investor withdrawal has accelerated as they seek shelter in the safe haven US Dollar and Yen.

Another major factor for the Rand’s decline is the ongoing concerns over the stability of the South African labour market. Long running wage disputes now threaten to cause up to 335,000 workers to take strike action. Deadlock between employers and the country’s two biggest labour unions now threaten to spread.

On September 2nd up to 72,000 workers from the auto sector are expected to strike after wage talks broke down. They will join employees in the auto-manufacturing, construction and aviation industries that are already on strike, while gold mines face the threat of labour action.

The National Union of Metalworkers of South Africa (Numsa) said; “We have taken a conscious decision to exercise our hard fought democratic and constitutional right to embark on an indefinite strike action. The strike action has not been on our agenda, but it has been imposed on us.”

The next piece of key data for the Rand comes on the 30th of August. The balance of trade data is likely to show a decline compared to the previous month as the strikes impact the wider economy.

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