Miner Kerfuffle Causes Scared Turtle Act from Rand
Just when your currency of choice starts picking up strength, someone starts protesting and your prospects start going down the drain! Isn’t that always the case? Well, maybe not always. But with the South African miners dispute and the trouble the Rand is experiencing every time someone sneezes, it certainly seems as if R investors are treading on eggshells.
Protests are the norm around the world, and they do always manage to affect financial markets in some form or fashion. Such was the case last Wednesday when the Amplats’ Rustenburg miners were lit up with tear gas and chased around by police.
The fear that something bigger would arise from this protest, ala Egypt, sent the Rand plummeting a bit while the Dollar picked up a head of steam in the late trade. The good news here is that the Rand was actually stronger that morning. It took the tear gas incident, and threats of other miner strikes and protests, before investors began losing confidence in the currency.
And just when you thought the situation was contained in-house, Spain had to act up and cause even more problems for the Rand. As most Rand loyalists know, as the Euro goes, so goes the Rand (at least is the case usually). So with renewed concerns about Spain’s economic situation, the Euro started to struggle a bit, $1.3027 from $1.3024, and the Rand lost even more ground.
If Spain needs to be propped up further, the Rand loses more strength and the Dollar gains more ground. That news is either good or bad, depending on which side of the plate you’re batting from. Whichever side, understand that outside influences cause commotion in the financial world, so always focus on connected economies.