South Africa rand weakens on US assassination of top Iranian general

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The rand on Friday morning reversed its gains from earlier in the week to weaken by 2% in the wake of the assassination of a top Iranian general by the US military.

Iranian commander Qasem Soleimani was killed in a US strike on Baghdad’s international airport on Friday.

“News of the killing of an Iranian commander has ignited fears of a full-blown military conflict developing in the Middle East this year,” commented Bianca Botes, Treasury Partner of Peregrine Treasury Solutions.

“These concerns have created a risk-off market environment as investors seek out safe-haven assets. As a result, the market’s risk aversion has cut the recent rand rally short,” she told Fin24 in an emailed response.

The local unit started the week at R13.99. It opened at R13.91/$ on Thursday morning, but weakened over the course of the day due to strong US jobs data and weak European and UK data, Botes said.

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The rand opened at R14.08 on Friday morning, and had weakened 2% to R14.36/$ at 13:05.

TreasuryONE, in a snap market update on Friday morning, said the risk-on behaviour of the market which was prevalent in the last couple of weeks had been reversed due to the impact of the US air strike.

“Emerging markets have given back some ground as the surge for save havens occurred,” the update read.

“For now the international market will dominate headlines and emerging markets can likely be under pressure.”

In contrast, gold climbed to $1 540 and oil surged around 3%, TreasuryONE noted. Bloomberg reported earlier that gold spiked to its highest in four months.

 

Source: Fin24.com

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Author: abokimallamfx