Europe debt concerns hurt rand

Johannesburg - The rand weakened by midday on Friday amid concerns over debt levels of European economies that knocked the euro lower along with emerging market currencies. A local currency trader noted that 'it could get ugly'.

At 11:48 the rand was bid at R7.6825 to the dollar from R7.6506 at its previous close. It was bid at R10.5381 to the euro from its previous close of R10.5411 and was at R12.0738 against the sterling from R12.0733.

The euro was bid at $1.3681 from $1.3742 previously.

A local currency trader noted the debt issues in Western Europe and including Greece, Spain, Portugal, Italy and Ireland added to risk aversion.

"Commodities are softer, and all this is having a knock on emerging market currencies. It could get ugly," he said.

He pointed out that R7.72 against the dollar was a significant number. "Thereafter R7.76 will come under threat.

"The euro in the mean time continues to take a knock, with no insight until Portugal, Greece, Spain, Italy and Ireland are in the clear," he said.

Dow Jones Newswires said that in the foreign exchanges, the euro and sterling fell against the dollar and yen as risk aversion rose ahead of the US labour-market data.

Min Sang-il at E*Trade Securities in Seoul said: "Investors are anxious that more negative factors may emerge. European debt concerns have strengthened the US dollar and this has stoked concerns that the dollar carry trade may end soon and risk aversion may heighten further."

At 09:20 GMT, the euro was trading at $1.3689, down from $1.3723 in late New York trade on Thursday, while the dollar fetched ¥89.57, up from ¥89.05.

For now, traders tuned their sights to the day's highlight, the US nonfarm payrolls report for January at 13:30 GMT. Economists in a Dow Jones Newswires poll expected payrolls to be unchanged in January from December.

- I-Net Bridge