Johannesburg - The rand weakened against the dollar on
Monday and government bonds also eased as fears increased that Spain may need a
full sovereign bailout, hitting global investors’ appetite for riskier emerging
market assets.
The rand dropped almost 1% against the greenback to R8.3666
by 06:24 GMT after Friday’s New York close of R8.29. The rand was largely
tracking a sharply weaker euro, the currency of South Africa’s largest trading
partner.
The heavily indebted region of Valencia in eastern Spain
said on Friday it would need financial help from Madrid, spooking financial
markets and complicating central government efforts to stave off a full-blown
sovereign bailout.
“The announcement that Valencia, one of the Spanish regions,
is troubled saw the euro come off aggressively,” said Brigid Taylor, head of institutional sales at
Nedbank.
“It has continued to weaken as concerns around debt default
in the eurozone, as well as the pressure on Greece, escalate again.”
Government bond yields jumped, with the yield on the three year bond up six basis points to 5.450% while that on the longer dated paper rose 8.5 basis points to 7.28%.