An employee counts mixed denomination rand currency notes at the Forex department inside a First National Bank (FNB) branch in Johannesburg, South Africa, on Friday, March 15, 2013. A recovery in mining and manufacturing is giving South Africa's rand and bonds a breather amid concern that growth is slowing while inflation accelerates. Photographer: Nadine Hutton/Bloomberg

Turmoil in Ukraine is giving the rand an unlikely role – that of a refuge from the risk that the crisis in eastern Europe will escalate.

“I never thought I’d say this, but South Africa has become the new safe haven” in the Europe, Middle East and Africa (EMEA) region, Benoit Anne, the head of emerging market strategy at Société Générale, said on Tuesday.

“Look at how resilient the rand has been during these past turbulent weeks. I’m not prepared to turn bullish on the rand yet, but I don’t want to go short either.”

It has gained 5 percent against the dollar since the first week of February. That is the most among 10 emerging market currencies in the EMEA region tracked by Bloomberg.

At 5pm yesterday, the rand was bid at R10.7306 to the dollar, effectively unchanged from the same time the previous day.

The rand’s gain also reflects an improvement in the current account deficit, which contracted for the first time since 2012 in the fourth quarter.

For the first time since June last year, the cost of insuring South Africa’s dollar debt is less than that for Russia, which shares the same credit ratings.

The cost of credit default swaps dropped 315 basis points between February 3 and Tuesday, while contracts for Russia soared 80 basis points. Russia’s rouble slid 2.1 percent against the dollar in the same period.

South Africa does not import natural gas from Russia or Ukraine, although it imports some wheat from Ukraine.

Its exports to those countries accounted for 0.2 percent of gross domestic product (GDP), Société Générale said. That was the lowest proportion of 17 emerging and developed markets in the EMEA region.

Turkey’s exports to Ukraine and Russia were equal to 1.1 percent of GDP, while for Poland the figure was 3 percent and for Hungary 4.3 percent.

“From a trade perspective, South Africa isn’t exposed,” Ilke van Zyl, an economist at Vunani Securities, said.

Nicholas Spiro, the managing director of Spiro Sovereign Strategy, said: “The rand looks and feels more insulated now. Right now there are several currencies that are more vulnerable.” – Bloomberg