Rand weakens on concerns over new variant of virus

The rand inched down again on Tuesday as concerns over the spread of a new variant of the coronavirus chilled demand for the South African currency.

At 1500 GMT, the rand was 0.31% weaker at R14.65 versus the dollar, edging further away from its almost 11-month high of R14.51 touched on Friday.

The emergence of the new variant of the coronavirus in South Africa was identified last Friday by health authorities who said it was driving a new wave of infections.

“The ZAR felt the heat and weakened on the news, but it would be wrong to single out just the ZAR. Most emerging market currencies came under significant pressure,” economists at ETM Analytics said in a note.

“However, as we head into the end of the year, thinner market liquidity conditions will ensure that volatility levels could remain elevated and the markets might well respond in a disproportionate way to any surprise news that is released.”

A growing number of countries, including Germany, have barred travellers from South Africa while they assess how much danger the new variant of the virus poses.

The Johannesburg Stock Exchange’s Top 40 index closed 0.48% lower, at 53,527 points. The broader All-Share index was down 0.37% at 58,496 points.

Petrochemicals giant Sasol led the fallers on the blue-chip index, its shares sliding nearly 4%. Gold miners also lost ground as global bullion prices dipped, hurt by the greenback’s rebound.

Government bonds were firmer, with the yield on the instrument due in 2030 falling 9.5 basis points to 8.760%.