South Africa’s rand dipped in early trade on Wednesday, ahead of a court hearing on a public sector wage dispute later in the day that could have important implications for government finances.
At 0615 GMT, the rand ZAR=D3 traded at 15.2700 against the U.S. dollar, around 0.15% weaker than its previous close.
The rand had gained on Tuesday, as hopes of a coronavirus vaccine and signs of economic recovery around the world kept investors interested in riskier assets. unions took the government to court after it failed to pay wage increases in April that were agreed under a three-year deal struck in 2018 but which officials say are no longer affordable. its salary bill is a key part of the government’s plan to arrest rising debt levels, and if the court sides with the unions and makes the government pay, it could jeopardise that plan. hearing will start around 0800 GMT.
Government bonds also dipped in early trade, as the yield on the 2030 bond ZAR2030= rose 1 basis point to 9.02%.