Rand sharply drops as Russia attacks Ukraine

The South African rand opened sharply weaker on Thursday, as investors dumped riskier assets after Russian forces attacked Ukraine.

Investor sentiment was also dampened by Fitch Ratings pointing to difficulties containing spending and warning that recent strong revenue growth may prove temporary, in response to Wednesday’s 2022 budget.

At 09:50, the rand traded at 15.3360 against the dollar, around 1.85% weaker than its closing level on Wednesday.

The local bourse also took a knock, with the JSE All Share down 1.83% at 73 612.65 points and the Top 40 down 1.87% at 67 090.27.

Global stocks dived, while the dollar, gold and oil prices rocketed higher.

Overnight, Russian President Vladimir Putin authorised what he called a special military operation in eastern Ukraine but Ukraine’s Foreign Minister Dmytro Kuleba said on Twitter that Russia had launched a “full-scale invasion”.

Around 11:30, Statistics South Africa will release the January producer price index, providing further clues about inflationary pressures in Africa’s most industrialised economy. Economists polled by Reuters predict PPI will ease to 10.5% from 10.8% in December.

From 12:30 onwards, Finance Minister Enoch Godongwana will address lawmakers on the budget, which forecast public debt would peak sooner and at a lower level than earlier expected.