Rand steady despite euro risk
Johannesburg - The rand was steady against the
dollar in noon trade on Friday, even though the eurozone debt crisis
loomed in the background.
"The rand this morning started off more or less where it is
now and it's tracking the euro which continues to pivot around US$1.310
in very limited levels of action," a local rand trader said.
"Europe is still rather precarious even though earlier in the week we had good news from the FOMC."
The trader added that the market had no real direction at present and was "living on rumours".
"US GDP comes out later today but I really don't know how much
effect it will have. I expect to see a little bit more dollar buying as
we move closer to the weekend."
At 11:48 local time, the rand was trading at R7.8026 to the
dollar from its previous close of R7.8192. It was trading at R10.2282 to
the euro from R10.2301 before, and at R12.2432 against sterling from
The euro was trading at $1.3121 from its previous close of $1.3087.
RMB said in a note on Friday morning, that the rand had
finally experienced a good move yesterday with the dollar/rand dropping
all the way to 7.79. There had also been some gains on the other
crosses, notably the British pound and yen and even compatriot
currencies such as the Aussie dollar.
RMB added that euro/rand had also pushed lower, but a break of
the 10.20 level was a major piece of the puzzle that needed to be in
place to keep rand gains going.
There were tentative signs that a different piece of the puzzle was starting to fall into place, RMB said.
"Foreigners were aggressive buyers of our bonds yesterday and
while the data is exceptionally volatile, you can start to see a trend
towards buying. This pattern is more evident in the EPFR data, which
showed that international investors turned aggressive buyers of emerging
market bonds in the week ended Wednesday."
RMB said the rand's short-term moves would depend mostly on
euro/dollar, which had fared well after the dovish Fed announcement.
"Event risk is largely confined to this afternoon's US 4Q11
GDP number. Expectations are that the world's largest economy ended the
year on a very strong note."
Meanwhile Dow Jones Newswires quoted Credit Agricole as saying
that the euro was increasingly resilient as it had shrugged off
negative news in the eurozone over recent weeks. This was in spite of
on-going debt discussions in Greece and worries about a potential
Portuguese debt restructuring.
Credit Agricole also saw the euro/dollar consolidating its gains ahead the European Union's summit on Monday.
Eurozone leaders might meet on Monday evening to discuss
Greece's latest problems in reducing its debt levels, the Financial
Times Deutschland reported Friday.
An additional meeting of eurozone leaders immediately after
the official European Union summit on Monday could be ruled out, the
newspaper said, citing people close to European Council President Herman
However, German Chancellor Angela Merkel and French President
Nicolas Sarkozy were against such a meeting, according to the report.
European Union Economics Commissioner Olli Rehn warned on
Thursday that eurozone governments might have to increase their
contribution to Greece's debt deal, as Greece and its private-sector
creditors struggled to reach agreement on the level of writedowns.