USD/ZAR off two-week high as investors mull Russia mutiny impact

Key points

The South African Rand strengthened against the US Dollar on Monday, with the USD/ZAR pair distancing from recent two-week peak, as market players were on watch for ripple effects of the aborted rebellion over the weekend by armed mercenaries in Russia.

Heavily armed Russian fighters of the Wagner group seized the city of Rostov and advanced on Moscow seeking to remove Russian military leadership in charge of the Ukraine war.

The mercenaries withdrew to their bases late on Saturday in exchange for guarantees for their safety, while their leader, Yevgeny Prigozhin, will be exiled to Belarus under a deal brokered by the country’s President Alexander Lukashenko.

Oil prices rose on Monday as the events added to uncertainty over crude supply.

“Geopolitical risk amid internal instability in Russia has increased,” Rystad Energy analysts said.

“As such, we are likely to see a marginal uptick in oil prices in the coming days, if the situation does not deteriorate.”

Against a basket of six major peers, the US Dollar was little changed on Monday at 102.777.

In other news, South African state utility Eskom said over the weekend power cuts would be carried out at relatively low levels this week, since fewer power station breakdowns had allowed for more generation capacity.

Numbers of South Africa citizens have been facing nearly 10 hours per day of power cuts until recently, as the nation struggles with the most severe power crisis on record.

Meanwhile, South Africa Rand traders will be paying attention to producer price inflation, budget and trade balance data, due out later in the week, for further clues over economy health.

As of 9:41 GMT on Monday USD/ZAR was losing 0.60% to trade at 18.6008. Last Friday the exotic Forex pair went up as high as 18.7739. The latter has been the pair’s strongest level since June 9th (18.9001).