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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