Rand softer, euro stages modest recovery

Johannesburg - The rand was softer against the dollar in noon trade on Monday, as it tracked a euro that had come under pressure in Asian trade.

However, the single currency managed to recover some earlier losses against the greenback.

"It's been a quiet start to the week with the Chinese New Year being celebrated in the far east so there's not that much to report," a local rand trader said.

"We saw a risk rally in the rand last week but it's now reached points where it's sticking around the same levels until fresh news comes out of the eurozone."

The trader put rand dollar in a range of 7.88 to 7.98 for the remainder of the trading session.

At 11:31 local time, the rand was bid at R7.9639 to the dollar from its previous close of R7.9442. It was bid at R10.2919 to the euro from R10.2691 before, and it was unchanged at R12.3700 against sterling.

The euro was bid at $1.2933 from its previous close of $1.2887.

Barclays Capital said in a morning note that the European debt crisis continued to linger, which explained why currency traders were still positioned in favour of a short euro position, according to the Chicago Board of Trade's latest weekly CFTC data.

"EU finance ministers meet from today to decide over the course of the week the degree of debt restructuring that is needed in order for Greece to obtain the second bailout package tranche.

"The outcome of these discussions, together with the on-going discussions between Greek authorities and private sector Greek bondholders, should set the tone for the euro, which in turn should have a significant bearing on the rand, given that the rand remains highly correlated to the euro."

However, risk aversion was presently creeping back into the market on EU debt concerns.

"We suspect that the rand is poised to give back some of last week's gains," Barclays Capital added.

Meanwhile Dow Jones Newswires reported that the euro was under pressure in Asian trading hours as the Greek debt situation remained unresolved and as traders awaited the outcome of the Euro group meeting.

"The deadline [for Greek debt talks] continues to be pushed back and investors remain none the wiser as to what will be agreed and how much of a haircut investors will have to take in order to avoid a Greek default towards the end of March," Capital Spreads said.

The euro staged a modest recovery in European trading hours,however, investors were reluctant to make any bold moves.