Johannesburg - The rand was slightly firmer
against the dollar in noon trade on Tuesday in a volatile market.
"Up to now the session has been dominated by volatility and
uncertainty with no clear market trend," a local rand trader said.
"Gold is off by about $20 and that's no help either," he said.
The trader added that nothing contained in the SA Reserve Bank's quarterly bulletin had influenced the currency market.
At 11:47 local time, the rand was bid at 7.3838 to the dollar
from its previous close of 7.4025. It was bid at 10.0500 to the euro
from 10.1015 before, and at 11.6320 against sterling from 11.7199
previously.
The euro was at $1.3611 from $1.3658 before.
Earlier the Reserve Bank reported that SA's current account
deficit had widened to -R95.4bn or -3.3% of gross domestic product (GDP) in the second
quarter compared to -R87.8bn or -3.1% of GDP deficit in the
first quarter.
Standard Bank analysts said in a morning note on Tuesday that
the rand had been victim again to heightened global risk aversion
yesterday.
"Risk-off sentiment is being fuelled by the deepening debt
crisis in Europe associated with the growing possibility of a Greek
default, and this is prompting many participants to liquidate their
emerging market exposures in favour of cash and safe haven assets.
"Yesterday's rand weakness was particularly severe, as the
rand underperformed all of its emerging market and commodity-based
currency peers, which ensured that most of our short-term targets were
attained in just one trading session."
Standard Bank said that although the rand had recouped some of
yesterday's losses this morning, a return to R7.49 or even R7.52 was
still possible this week because when global risk aversion bit, a liquid
and deep EM currency such as the rand (with no exchange controls for
foreign investors) was particularly vulnerable.
"The dismal SA consumer confidence data published yesterday
was also conducive to a weaker rand from a GDP differential
perspective."
Meanwhile, the euro maintained its volatility following what
Dow Jones Newswires called "a disappointing Italian bond auction."
The Italian Treasury sold a total of €6.485bn Treasury
bonds, or BTPs, at an auction Tuesday, the Bank of Italy said.
The Treasury offered €3bn to €4bn of the
2016-dated BTP, and a combined €2bn to €3bn of the three
other non-benchmark, or "off-the-run" BTPs.
The 2016-dated BTP was a new issue, while the others are
reopenings of issues launched in 2008, 2004 and 2010, respectively.