The rand fell to its weakest level in over a year on Thursday (25 November) on the back of the recently-discovered B.1.1529 variant and a new UK travel ban for Southern Africa.
The local unit lost a further 2.15% against the dollar on Friday morning, as markets in Asia responded to the news.
While researchers are yet to determine whether the B.1.1529 variant, discovered in Southern African countries is more transmissible or lethal than previous variants, authorities globally, have been quick to act, Bloomberg reported. The UK and Israel have temporarily banned flights from South Africa and five neighbouring countries as a precautionary measure.
UK health Secretary Sajid Javid said on Thursday that from noon on Friday (12h00, 26 November), flights to and from South Africa, and countries including Botswana will be temporarily banned. Any UK nationals arriving from the specified countries will have to quarantine, he said.
“There is some risk off happening from Japan to Africa due to concerns around a new virus variant being found in South Africa but the good thing is countries such as UK are acting fast to curtail its spread,” said Justin Tang, head of Asian research at United First Partners.
“Given that the world has gone through this before with Delta, there is already a playbook for such situations – even if the new variant overstays.”
Airlines and other travel stocks across Asia were among the biggest decliners as traders reacted to the prospect of further flight curbs. Oil retreated as the new strain raised concerns about the outlook for energy demand before the Organisation of the Petroleum Exporting Countries and allies meet next week on its production policy.
Global investor nerves were already frayed this week amid concern over the withdrawal of stimulus from the Federal Reserve and the seemingly relentless rise in inflation.
At 07h26 on Friday (26 November), the rand traded at the following levels again the major currencies:
- Dollar/Rand: R16.19 (2.14%)
- Pound/Rand: R21.54 (+1.94%)
- Euro/Rand: R18.17 (+2.32%)
With further reporting by Bloomberg.