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Johannesburg - The rand lost ground against the dollar on
Wednesday and could trade with a weaker tone after failing to sustain levels
below the key resistance area of R8.10 overnight.
In the absence of market-sensitive news locally, the rand
will take direction from abroad, with the European Central Bank’s meeting and
debt auctions in Spain and Italy taking centre stage.
The rand hit R8.0625 late on Monday but retreated as
importer buyers of dollar came in strongly.
Government bonds followed the rand weaker, reversing some of
Tuesday’s gains after a strong first debt auction of the year. The yield on
the 2015 bond ticked up 0.5 basis points to 6.815%, and that on the 2026 issue
rose by the same margin to 8.595%.
The rand was trading at R8.1255 to the dollar at 06:30 GMT,
0.3% weaker than Tuesday’s New York close of R8.1025.
"The rand has failed to sustain yesterday’s gains due to
apprehension surrounding tomorrow’s Spanish and Italian bond auctions," Absa
Capital said in a note.
"If the appetite for these auctions is poor, then risk
aversion is likely to resume, while the dollar and other safe haven assets are
likely to continue strengthening."
The rand has been at the mercy of European developments in
the past few months, losing about 22% against the dollar in 2011 as the
eurozone debt crisis deepened.
Local stocks looked set to start on a slightly positive note, with the JSE’s March futures contract up 0.08% before the start of trade at 07:00 GMT.
