(Bloomberg) -- The identification of a fresh Covid-19 strain in South Africa could not have come at a worse time for the rand.
Already reeling from concerns about Federal Reserve policy and a general risk-off mood because of emerging market politics, the currency is now on track for the biggest weekly drop for five months. It slid as much as 2.4% to the weakest level against the dollar since October 2020 on Friday.
With Germany and the U.K. among countries closing travel to and from South Africa, that diminishes the chances of an economic revival for the nation. Tourism-related stocks are getting hit, with hotel group City Lodge down more than 20% in Johannesburg.
Bond yields are surging, and the yield curve is steepening, suggesting traders are pricing in a growth slowdown. The longer-dated 2041 has risen about 20 basis points versus 6 for the 2026.
That’s set to damp any year-end cheer in markets.
- NOTE: This was a post on Bloomberg’s Markets Live blog. The observations are those of the blogger and not intended as investment advice. For more markets analysis, run MLIV on the Bloomberg Terminal.
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