The South African currency, which hit an eleven-month high versus the greenback this week, pared its weekly gains as an Indian newspaper affirmed that the merging of Bharti with MTN may take longer than expected, raising concerns about investments in South Africa.
After posting virtually two weeks of consecutive gains versus most of the 16 main traded currencies, on renewed optimism and stocks rally, the South African rand ended the week with a negative performance as the Economic Times stated that MTN Group Ltd., the largest African mobile-telephone operator will take longer to close a deal with Bharti Airtel Ltd., which is interested in a stake of Africas mobile network, promising the injection of $7 billion in the South African economy. According to the newspaper, the complexity of the deal may delay the negotiations in additional weeks, raising concerns about the money to be invested in South Africa by the Indian telecom operator.
The influence of the companies merge in South Africa is strong, considering the size of the deal, an eventual delay is expected to affected the South African currency, at the same time as a strong rand may decrease attractiveness for Bharti to invest in South Africa, since costs become naturally higher. This Fridays devaluation was a healthy correction for the rand and for the upcoming mobile-operators deal.
USD/ZAR ended the week at 7.7495 from a previous rate of 7.7580.
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