The rand raced to R15.35 to the US dollar as Russia’s attack on Ukraine roiled markets.
Russia has started its “war of aggression” in the early hours of this morning with a “full-scale invasion of Ukraine”, with pleas from Ukraine’s foreign ministry for the world to “act now” to stop Russian President Vladimir Putin.
But any action could spark the biggest war in Europe since 1945, as Putin, in a short televised address, said they have no intention to occupy Ukraine, but sent a chilling warning intended for the US and its allies. “To anyone who would consider interfering from the outside: if you do, you will face consequences greater than any you have faced in history. All relevant decisions have been taken. I hope you hear me,” he said.
The attacks reportedly began on the orders of Putin who announced a “special military operation” at dawn. Within minutes of his address, at about 5am Ukrainian time, explosions were heard near major Ukrainian cities, including the capital Kyiv, reports The Guardian.
The attack comes just two days after Putin recognized Donetsk and Luhansk in eastern Ukraine as independent and mobilised Russian forces into the breakaway region for “peacekeeping functions”. The move sent shockwaves across the globe and triggered a new round of sanctions from the West. US President Joe Biden then already warned that Russia’s invasion of Ukraine had begun.
In a statement following the first reports of attacks, Biden said “the prayers of the entire world are with the people of Ukraine tonight as they suffer an unprovoked and unjustified attack by Russian military forces… President Putin has chosen a premeditated war that will bring a catastrophic loss of life and human suffering”.
The offensive triggered a big flight to safety in the markets, with gold appearing to be the “only true safe haven”, John Feeney, business development manager at Sydney-based bullion dealer Guardian Gold Australia told Bloomberg.
Gold, which has risen in recent weeks as Moscow’s stand-off with the West intensified, has hit its highest level in more than a year this morning, gaining as much as 2.1% to $1,949.03 an ounce, the highest level since January 2021, reports Bloomberg.
According to the news wire there were also sharp moves in industrial metals, with nickel surging as much as 3.2% to a fresh decade-high while aluminium gained 2.1% to near a record. The concern is that a deepening crisis will end up disrupting supplies at a time of low global inventories. Russia’s exports are equivalent to 5.3% of global nickel production, and about 4.2% for aluminium.
Oil prices have surged past $100 a barrel, the highest levels seen by the international benchmark Brent crude futures in more than seven years.
By 9.30am the rand was trading 1.46% weaker at R15.35 as the dollar strengthened significantly.
“We woke up to the news that Russia has launched an attack on Ukraine, targeting Ukrainian military installations. Large explosions have been heard in some major cities while Russian troops have entered eastern Ukraine. There has been a rush to safe-haven assets in the financial markets with the dollar strengthening sharply, gold surging higher, the oil price breaking above $100, and global equity markets being sold off,” reports TreasuryONE.
“The Russian ruble has weakened by nearly 9.0% this morning, now quoted at a record low of 88.32 against the dollar and dragging EM currencies weaker. Yesterday’s post budget positivity in the rand has completely disappeared, with the rand currently trading 1.2% softer at 15.28. We expect a volatile day as the situation in Ukraine unfolds, with the short-term target of 15.35 now well within range.”
In other local news affecting consumers’ pockets, the focus of Finance Minister Enoch Godongwana’s first Budget yesterday was on measures expected to take pressure off household budgets but for most income earners keeping up with inflation, the tax adjustments will just maintain the status quo.
Smokers and drinkers, however, will have to pay higher sin taxes again.
If you are retired and receiving a pension from more than one fund or annuity provider, be sure you are aware of changes to the tax that will be deducted from your fund from March.
Here’s a roundup of the world’s top and most interesting headlines:
SA Business
Rating agency sends warning to South Africa after budget – BusinessTech
Bailouts for Eskom’s R392-billion debt problem — if it cuts jobs – MyBroadband
Too rich yet not rich enough: Why South Africa’s access to Covid-19 pills is not equal – Fin24
Global Business
Russia-Ukraine crisis live updates: Putin has launched ‘full-scale invasion’, says Ukrainian foreign minister – The Guardian
R3 trillion club loses last member as Elon Musk’s wealth tumbles – Bloomberg/BT
World condemns Putin’s ‘thuggery’ after Russia launches military operation in Ukraine – Global News
Markets
Oil breaks $100, havens rally, equities drop as Russia enters Ukraine – AFP
Gold surges as Putin’s move bolsters ‘only true safe haven’ – Bloomberg
Bitcoin tumbles as Putin orders military into eastern Ukraine – Bloomberg
Opinion/In-depth
Why China matters in the Ukraine conflict – BBC News
SA’s silent subsidies: How much citizens will have to pay for key govt services – on top of tax – Business Insider
A long stumble to environmental justice – Finance minister takes baby steps towards addressing climate crisis – Daily Maverick
Video
Ukraine’s energy gamble: Can it unplug from Russia? – NYT News
Pain at the pump here to stay as Ukraine crisis impacts gas prices – Newsy
‘Relax South Africa’: Alec Hogg on Enoch Godongwana and how he just may help turn this ship around – Biznews
