Rand weakens as Ukraine tensions intensify

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NewRandMoney Reuters.

Johannesburg - South Africa's rand weakened against the dollar on Monday as the threat of war in Ukraine weighed on investor sentiment, especially towards emerging market assets.

The rand was at 10.81 against the dollar at 08:15 SA time, half a percent weaker than Friday's New York close of 10.7575.

“Events around Ukraine have resulted in an increase in global risk aversion over the weekend,” Rand Merchant Bank said in a note.

“An escalation of tensions will see a further fall in global risk aversion and rand weakness.”

The currency is also under pressure from trade figures released on Friday that showed a deficit of 17.06 billion rand in January, surprising economists after a 2.78 billion rand surplus in December.

The wider-than-expected deficit puts the focus back on to South Africa's current account, which has deteriorated in the past year due to labour unrest in the mining sector.

On the data front, investors will watch new vehicle sales numbers for February for clues as to the state of consumer spending in Africa's biggest economy.

Government bonds also weakened, with the yield on the benchmark 2026 issue rising 4.5 basis points to 8.6 percent and that on the 2015 bond gaining 5.5 basis points to 7.175 percent. - Reuters

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