Johannesburg – The rand firmed in midday trade on
Monday, fending off a soft euro amid volatile trade.
12:07 the rand was bid at R7.5425 to the dollar from R7.5316 at its previous close. It
was bid at R9.2917 to the euro from its previous close of R9.3145 and was at
R10.8762 against the sterling from R10.9527.
The euro was bid at $1.2315 from $1.2356 previously.
"Despite the euro trading at four year lows, the rand remains strong, with
support at R7.55
against the dollar, and below that, R7.52. The euro however, will continue to be
the focus," a local trader said.
Dow Jones Newswires reported that the euro and sterling were firmly in the spotlight during
European trading hours, as both currencies stabilised somewhat after a flogging in
The euro traded at around $1.23 against the dollar, having plunged to a four-year low of
$1.2234 in Asian trading hours, amid persistent concern over the structure and
outlook of the European single currency.
This fresh bout of weakness represented a continuation of the decline seen on Friday, when reports
that France was considering dumping the euro shook the currency markets.
Those reports were later denied by the French authorities, but it is clear that
the damage has been done.
"What we are currently experiencing is almost like a run on the
euro," said currencies analysts
at Commerzbank in Frankfurt. "There is little reason to expect an end to the
freefall of the euro," the bank added.
Both Greece and Portugal are expected to pay back some of their bondholders later this week, and
Spain is also due to issue fresh debt, offering plenty of flashpoints in the
Even if all of these redemptions and issues go well, analysts generally see this pressure on the
single currency continuing.
"Investor sentiment has become resolutely negative with respect to the euro, and even
further stabilisation in sovereign debt markets may not be sufficient to prompt
a significant euro bounce at this stage," said analysts at Credit Suisse.
Indeed, some analysts suggested that the tumble in the euro is now so pronounced that the
risk of official intervention to stabilise the currency is now rising.
The picture was no brighter for sterling. Overnight, data from Rightmove showed that UK house
prices had climbed modestly in the weeks running up to the May 6 general
election, with the prices demanded by sellers between April 11 and May 8 rising by
4.3% on the same period in 2009. An upbeat inflation reading Tuesday is
also a possibility.
However, currencies traders showed no interest in the data, and pushed sterling down to a
fresh 13-month low against the dollar. That's because investors are
concerned that the new UK Chancellor could be set to reveal that the country's
finances are in worse shape than had previously been thought.
The pound sank to $1.4256 against the dollar in Asian hours, before stabilising around
the $1.44 area in Europe.
George Osborne held a press conference outlining his plans to establish a new
fiscal council to oversee tax and spending plans.
"If we fail to tackle the deficit we inherited from the previous government, the
consequences could be disastrous," Osborne said at a press conference. He also
set the date of the next Budget as June 22. His comments helped to bolster the
pound somewhat, pushing it back above $1.44.
09:25 GMT, the euro was trading at $1.2317 against the dollar, from around $1.24 late in
New York on Friday, according to trading system EBS.
traded at $1.4451, from $1.4550.
- I-Net Bridge