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Rand feels eurozone pressure

Sep 25 2012 09:22
Johannesburg - The rand opened softer against the dollar on Tuesday after the currency of its main trading partner, Europe, fell due to more worries about Spain’s debt situation and German business data raised fears of slowing growth. 

The rand was 0.32% weaker at R8.2670 against the dollar at 06:23 GMT from New York’s Monday close of R8.24.

Lower trading volumes are expected on Tuesday after a national public holiday in South Africa.

“With poor global data and renewed concerns about Europe, EUR/USD is starting to slide again,” Rand Merchant Bank said in a note. “The trend is now downwards, placing some mild upside pressure on USD/ZAR.”

A drop in German business sentiment to its lowest since early 2010 stoked concerns about a slowdown in the eurozone’s largest economy, despite the European Central Bank’s recently announced bond-buying plan.

Spain also remained in focus as its government bond yields rose on concerns Madrid is dragging its feet in requesting the international bailout that most market participants expect.

The yield on South Africa’s three year bond declined six basis points to 5.33% and that on the longer dated 14-year paper shedding eight basis points to 7.39%.

Treasury is due to auction on Tuesday R2.1bn in total of its 2023, 2026 and 2048 government bonds at 09:00 GMT.

“Demand is once again expected to remain robust with activity generally picking up around auctions,” Rand Merchant Bank added.

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bonds  |  rand  |  markets


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