South African Rand Tackles New Covid Fears, Variant

South African Rand.

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The South African rand fell sharply against the dollar on Friday after a new variant with numerous mutations was detected in the country.

The currency fell to 16.2391 against the greenback during Asian trading hours on Friday and was last trading around 1.6% lower at 16.2215 per dollar.

The losses came as investors rushed to safe-haven currencies such as the Japanese yen, which strengthened about 0.6% against the greenback to 114.69 per dollar. The US dollar index, which tracks the greenback against its peers, stood at 96.712, down from levels below 96.5 seen earlier this week.

A currency analyst told CNBC’s “Street Signs Asia” on Friday that the rand’s big move may be due in part to the decline in the number of trades made during Asian hours.

“This new fundamental of the new variant in [South] Africa, combined with low liquidity in Asia, is certainly the source of this price development, ”said Adarsh ​​Sinha, co-head of rate and exchange rate strategy for Asia at Bank of America Securities.

World Health Organization officials said on Thursday they were monitoring a new variant with many mutations in the spike protein – the part of the virus that binds to cells in the body. The health agency is planning a special meeting on Friday to discuss what this may mean for vaccines and treatments.

The variant, called B.1.1.529, has been detected in South Africa in low numbers, according to the WHO.

“We don’t know much about it yet. What we do know is that this variant has a lot of mutations. And the concern is that when you have that many mutations, it can impact the behavior of the virus, “Dr Maria Van Kerkhove, WHO technical officer on Covid-19, said in a question-and-answer session broadcast live on the organization’s social media.

Hours after the announcement, the UK said it would temporarily suspend flights from six African countries.

– CNBC’s Hannah Miao contributed to this report.

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