Johannesburg - The rand was on the back foot against the dollar
on Thursday after shedding as much as 1.6% the previous session, with eurozone
debt worries rekindling aversion towards emerging market assets perceived as
carrying higher risk.
Government bonds added to the previous day's losses, with
traders pointing to prospects of increased supply when the National Treasury
resumes its weekly auctions next week after a brief hiatus for the just-ended
At 06:41 GMT the rand was at R8.1750 against the dollar,
down 0.65% from Wednesday’s close at R8.1250.
It tracked the euro, the currency of South Africa’s main
trading partner, which came under pressure as markets refocused on concerns
about the eurozone debt crisis ahead of a French debt auction later in the
“The euro started the year fairly perky but seems to have
lost its lustre a little bit and on the back of that, below R8.10 there seems
to be fairly good demand for dollar/rand,” a Johannesburg trader said.
“I would imagine the rand is going to continue tracking the
usual suspects, that is the euro and other emerging markets. If anything we
could tend a bit weaker but maybe not at such a rapid pace,” he said, adding
markets were starved of any domestic data or news at the moment to drive the
On the debt market, bonds extended Wednesday’s losses, with
the yields on the heavily traded 2015 and 2026 issues each adding 2.5 basis
points to 6.875% and 8.66% respectively.
“Yields fell over the last two weeks with no liquidity and
now it’s just sanity prevailing,” Investec bond trader Steve Arnold said.
“Also a slightly weaker rand and an announcement of next
week’s bond auciton has seen a little bit of profit-taking,” he said.
The Treasury will offer R1.1bn of the 2018 government bond
and R1.0bn of the 2031 paper next Tuesday.