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South African rand pauses, resilience could be tested by Ukraine fears

Credit: REUTERS/Mike Hutchings

The South African rand was flat early on Monday, but its recent resilience in the face of hawkish signals from global central banks could be tested by warnings that Russia could invade Ukraine at any time.

JOHANNESBURG, Feb 14 (Reuters) - The South African rand was flat early on Monday, but its recent resilience in the face of hawkish signals from global central banks could be tested by warnings that Russia could invade Ukraine at any time.

At 0637 GMT, the rand ZAR=D3 traded at 15.2200 against the dollar, the same as its close on Friday.

The United States on Sunday said Russia might create a surprise pretext for an attack on Ukraine, as it reaffirmed a pledge to defend "every inch" of NATO territory.

Analysts at ETM Analytics said the rand had been supported of late by South Africa's strong terms of trade, relatively high real yields and fresh reform pledges by President Cyril Ramaphosa.

But the standoff over Ukraine has the potential to rock global markets, they said in a research note.

Other potential drivers this week include January consumer inflation ZACPIY=ECI numbers and December retail sales ZARET=ECI on Wednesday. Economists polled by Reuters predict annual inflation will ease to 5.7% in January from 5.9% in December, while retail sales will rise 2.2% year on year in December compared to 3.3% in November.

Both releases will provide further clues about price pressures and the health of Africa's most industrialised economy, as markets try to predict whether the South African Reserve Bank will raise its main lending rate ZAREPO=ECI for the third consecutive time at its next monetary policy meeting in March.

The government's benchmark 2030 bond ZAR2030= was also little changed early on Monday, with the yield at 9.19%.

(Reporting by Alexander Winning; Editing by Shailesh Kuber)

((alexander.winning@tr.com; +27 10 346 1076))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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