SA Rand Stabilises, Risk-off Sentiment Weighs on EM Currencies
South African Rand (ZAR) stabilises against crosses on Thursday after the local unit struggled to hold value against the US dollar amid strengthening geopolitical tensions.
The local currency lost momentum on Wednesday, First National Bank (FNB) said in a note shared with its investor clients, noting stability in the forex market at the time of filing the report.
Though the rand is stable this morning, it remains under modest pressure amid Middle East-driven risk-off sentiment that has broadly weighed on emerging market (EM) currencies.
With global investors taking cover, EM currencies have been losing value since the fresh US-Iran attacks, amid demand for safe-haven currencies that has boosted the dollar index.
According to the bank, the South African rand is trading at R16.35 to the US dollar, R18.95 to the euro and R21.94 to the British pound on Thursday.
Despite global tensions, bullion was little changed in yesterday’s session and is slightly firmer on Thursday, supported by safe-haven demand as US-Iran ceasefire talks remain fragile and military activity in the region continues.
FNB said the precious metal is finding additional support from a slightly softer dollar, as the conditional ceasefire between Israel and Lebanon reduced some of the urgency for US dollar safe-haven positioning, freeing flows toward bullion.
Gold is trading at $4,475/ounce amid uncertainties in the commodity market. Oil prices are on a decline following reports of a ceasefire deal between Lebanon and Israel, which boosted hopes for a broader agreement to end the US-Israeli conflict with Iran.
The deal could potentially lead to a reopening of the Strait of Hormuz. This morning, Brent crude oil is trading at $ 97 per barrel. MTN Nigeria Declines by 7% on Significant Volume Action
