The Rand strengthened considerably in the last week, moving from R11.32 to the pound in the beginning of the week to R11.07 today.

Although the rand came under pressure with multiple strikes throughout the country, the currency remained resilient - gaining on all major currencies.

The Public service strike is in its 17th day and still going strong after the Unions rejected the government’s latest offer of 7.5% wage increase and R800 housing allowance. The members are still demanding an 8.6% salary increase witha R1000 monthly housing allowance. 

Increasing salaries at such a rate for the second year in a row could cause problems. Tony Twine, director of Econometrix, believes that if the Government continues to increase salaries by a higher percentage to where they try to keep the inflation rate, it can cause problems to South Africa's economic growth over the next five years.

Another strike arose this week when fuel station workers who are members of the Numsa Union decided to go on strike demanding a 20% wage increase with a guaranteed 40-hourweek.

However,Sacci pointed out that business went on, "Notwithstanding the wide spread protest action, business continues to operate and the 'job still gets done' which provides strong evidence of the resilience of the South African economy to cope with adversity."

Even though the strikes raises concern and it was expected that it would put a lot of pressure on the Rand, new figures from the U.S.strengthened the Rand to a new 2.5 year high, reaching up to 7.1527 to the dollar today. “Charts suggest further strength forthe rand that has traded below its 200-day moving averages for more than two weeks.” News24 reported.

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The South African Rand was well supported this week indicating positive sentiment to news of plans by HSBCto buy up to 70 percent of Nedbank. The Rand traded between 7.315 and 7.368 to the US Dollar during the 23^rd August 2010 and 27^th August 2010 period.The Rand traded between 11.3534 and 11.4142 tothe British Pound in the same time period.

Old Mutual, as current controlling stake holder hasbeen involved in the talks with HSBC. Should the deal come to fruition the estimated value of the transaction has been pegged at about 49.9 billion Rand.Analysts believe the funds will be kept offshore with no actual Rand inflow expected. The South African Reserve bank will have ultimate sign off on where the funds will be held.

The Rand remained on the front foot in midday trade on Wednesday, despite continued global uncertainty and heightened fearsof a double dip recession.

RMB analysts said that risks of a double-dip recession are growing. "International data since mid-July has been very disappointing, especially in the US,and yesterday's housing data was probably the worst of the lot. Existing home sales dropped 27% in July alone to the lowest level in 15 years, fuelling concerns over fresh house price declines and yet another hit to consumer spending. 

"The rand, bizarrely, has out performed, this despite the disappointing local GDP figure - up only 3.2% q/q from 4.6% in 1Q10 - and the possible intensification of the public service strikes."

The public service strike put a slight dampener onthe growth of the Rand. The strike that started on Wednesday 18^th is still continuing after state workers defied a court order to return to work.

Composed by Candice Henderson

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The South African Rand 's gains against the Dollar were erased after Finance Minister Pravin Gordhan said the government was worried about the currency's strength. The South African government is worried about the effects of a strong rand on the economy. Proposals have been put forward bythe ruling African National Congress (ANC) for a tax on capital inflows to curb the Rand strength. The ANC will discuss the proposals at a mid-term policy review conference next month. Companies that rely on overseas earnings are most affected by the currencies exchange rate;the stronger the Rand the less the revenue.This is most evident in the Manufacturing sector where thousands of jobs have been culled as a result. "We want a sustainable economy that will create jobs and reduce poverty. We need to grow by 7 percent over a 20-year period andpreviously we've only done 5 percent. It's a challenge," said Gordhan.“What we call for is still a stable and competitive exchange rate".

Wednesday saw the start of a public servants strike as more than 1 million civil servants took to the streets seeking higher wages. The strikers shut down schools, blocked roads and barricaded hospitals. Public service sector unions and the government could hold renewed wage talks in the next week in an attempt to resolve the impasse which has resulted in increasingly violent strikes across the country.The strike had little impact on the Rand but longer term sentiment has more than likely been damaged.  "Any political happenings in the background doesn't bode well for foreign investment," said Nema Ramkhelawan, currency analyst at RMB.

Thousands of Capetonians gathered on Sunday to witness the planned demolition of Athlone's iconic cooling towers. More than 400 disaster management and law enforcement officers stood guard as the 21 600 tons of concrete fell to the ground. Cape Town mayor, Dan Plato was selected to activate the implosion device from the Pinelands Sports Club.The ‘Old Ladies of Cape Town” were imploded a few minutes before the scheduled 12pm demolition.

Composed by Candice Henderson

:: Note: The above exchange rates are based on"interbank" rates.
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