The rand currency fell sharply after more than a week of attacks on African migrant workers, accused by many poor township dwellers of stealing jobs and fuelling a wave of violent crime.

Local media said two people were killed overnight in the Ramaphosa squatter settlement east of Johannesburg.

Police fired volleys of rubber bullets to disperse about 700 people who earlier forced foreigners from the area, Reuters TV cameraman John Mkhize said.

At least two people were injured.

Thousands of foreigners, mostly from Zimbabwe, Mozambique and Malawi, have fled into refugee shelters since the violence began on May 11 in Alexandra township.

Several foreigners have been burned to death, women raped and scores of shops and homes looted.

More than 200 people have been arrested.

Criminal gangs are believed to be involved in the attacks.

The violence unsettled investors who feared the xenophobic attacks could hurt the economy.

South Africa's tourism minister said the violence could hurt the sector, which contributes around 8 per cent of Gross Domestic Product to Africa's biggest economy, employs a million people and attracted 8.4 million visitors last year.

The South African Football Association said the attacks could hurt the country's bid to host a successful soccer World Cup in 2010.

The unrest threatens to increase political instability at a time of electricity shortages, rising inflation and disaffection among the poor over President Thabo Mbeki's pro-business policies.

Mbeki has faced strong criticism, especially from ANC left wingers, for not spreading the benefits of black rule to millions of poor people.

South Africa, with a population of 50 million, is home to an estimated five million immigrants.

Foreigners have been lured from poorer neighbours by work in mines, farms and homes and by one of the world's most liberal immigration and refugee policies.

The biggest group - an estimated 3 million - are from Zimbabwe.

Nampa-Reuters

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