JOHANNESBURG – South Africa's rand sank this week to within sight of three-year lows against the dollar as a wave of strikes spread beyond the mining sector, threatening the biggest industrial crisis since the end of apartheid. After two months of violent labor unrest in the platinum and gold mines, Japanese car giant Toyota said on Thursday its Durban plant had fallen victim to the wildcat strikes that are shaking Africa's biggest economy only three months before an ANC leadership election. President Jacob Zuma is favourite to win re-election as head of the ruling party, although a widening of the strikes and sell-offs of the rand and domestic bonds threaten to expose his lack of economic expertise. So far, a wave of foreign flows into the bond market related to South Africa's Oct. 1 inclusion in the influential Citi World Government Bond Index (WGBI) on Oct. 1 have helped underpinned domestic asset prices. But signs are emerging that the WGBI effect is waning, and concerns about the strikes' impact on growth is rising. The rand has lost nearly 1.3 percent this week, recording its fourth daily loss in five days on Wednesday as strikes, a yawning current account gap and a Moody's ratings downgrade took their toll. “These events have had a marked impact on the currency, not-withstanding the evidence of substantial purchases of South African bonds by foreign investors on the back of the WGBI inclusion,” said Bruce Donald, a strategist at Standard Bank. “The strikes are certainly one of the factors impacting investor sentiment towards South Africa in terms of the political uncertainty it might create. It also has negative consequences for growth and for the current account through its impact on mining exports.” – Reuters
