South Africa‘s rand fell early on Tuesday, as appetite for riskier assets faltered after Russia ordered troops into two breakaway regions in eastern Ukraine in a dramatic escalation of a crisis that the West fears could unleash a major war.
At 0655 GMT, the rand traded at R15.18 against the dollar, 0.41% weaker than its previous close.
Russian President Vladimir Putin recognised two breakaway regions in eastern Ukraine as independent on Monday and ordered the Russian Army to launch what Moscow called a peacekeeping operation into the area.
But traders said a rise in commodity prices such as gold, which benefits the resource-rich South Africa, could limit sentiment-driven selling in the rand.
“The markets are so wishy-washy at the moment due to the massive uncertainty in various sectors of the world’s political and economic spheres. It’s becoming really hard to run even short-term risk at the moment given the higher intra-day volatility,” Warrick Butler, chief trader at Standard Bank, wrote in a note.
“The high commodities prices are helping the supply of dollars into (South Africa) but we still get these occasions where disinvestment/hedging takes place from an offshore investor.”
The yield on the benchmark 2030 government bond added 5.5 basis points to 9.175%, reflecting weaker prices.