The new Coronavirus variant predominant in South Africa has triggered a ripple effect on the South African rand making the rand fall sharply against the dollar after the variant, with many mutations was detected in the country.

On Friday, the currency fell to as low as 16.2391 against the dollar during Asia trading hours on Friday and last traded about 1.6% weaker at 16.2215 per dollar.

The decline was attributed to investors wanting to hedge against losses, thus opting for “safe-haven” currencies such as the Japanese yen, which strengthened about 0.6% against the greenback to 114.69 per dollar.

While the U.S. dollar index that tracks the greenback against its peers, was at 96.712, as compared with levels below 96.5 seen earlier this week.

According to the co-head of Asia rates and foreign exchange strategy at Bank of America Securities, Adarsh Sinha, “This fundamental news of the new variant in [South] Africa, combined with thin liquidity in Asia, is definitely driving part of that price action”.

What WHO is saying about the new Covid variant

On Thursday, World Health Organization officials said the new variant found in South Africa is currently being monitored by the agency. The WHO has said that the variant, called B.1.1.529, has been detected in small numbers in the country. Findings reveal that the new variant has numerous mutations to the spike protein, which is the part of the virus that binds to cells in the body.

The health agency is scheduling a special meeting Friday to discuss what it may mean for vaccines and treatments.

The agency’s technical lead on Covid-19, Dr. Maria Van Kerkhove, said “We don’t know very much about this yet. What we do know is that this variant has a large number of mutations. And the concern is that when you have so many mutations, it can have an impact on how the virus behaves,” in a Q&A that was livestreamed on the organization’s social media channels.