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Johannesburg – The rand lost further ground in afternoon
trade on Wednesday tracking a soft euro, after credit rating agency Moody's
said it may downgrade Portugal's sovereign debt.
Markets reacted to concern that Greece's debt crisis is revealing signs of spreading across the eurozone, while violent protests hit the streets of Athens.
At 15:43 the rand was bid at R7.6460 to the dollar from R7.5545 at its previous close. It was bid at R9.8266 to the euro from its previous close of R9.8095 and was at R11.5492 against the sterling from R11.4378.
The euro was bid at $1.2833 from $1.2965 previously.
A local trader said: "We are seeing some heavy trade as the rand continues to track the euro, which has dipped below $1.29 against the dollar.
"The rand should find support at R7.64-65 against the dollar, however this movement is entirely euro dependant."
One other trader said: "All eyes are on Greece and South Europe at the moment, it's pretty dire, and we are seeing risk aversion as a result. Moody's possible downgrade of Portugal has played a role, and so to have the riots in Greece."
Dow Jones Newswires reported that the euro tumbled to a 14-month low against the dollar on Wednesday, extending earlier losses as news that Moody's Investors Service placed Portugal under review for a downgrade accentuated eurozone sovereign debt fears.
The dollar, a main recipient of safe-haven flows, was higher against all major currencies on Wednesday morning.
European debt crisis remains 'front and centre'
The common currency slipped more than 1% to $1.2803, its lowest level since March 2009, after Moody's put Portugal's Aa2 government bond ratings on review. The rating could fall by one or two notches, the ratings agency said.
That pushed the euro further down versus the dollar, said Matthew Strauss, senior currency strategist at RBC Capital Markets in Toronto.
"The market tends to react...especially if it's on the negative side," Strauss said.
Win Thin, senior currency strategist at Brown Brothers Harriman in New York, agreed the Moody's downgrade warning was the latest trigger.
Further fuelling negative sentiment are reports that three people were killed on Wednesday after demonstrators protesting Greek austerity measures set fire to a bank building in central Athens, he said.
Earlier, a top manager with ratings agency Standard & Poor's said Wednesday the financial rescue plan for Greece isn't a long-term solution for the country's problems, according to the weekly German newspaper Die Zeit.
Markets remain almost exclusively focused on the sovereign debt crisis, with investors deeply concerned that the €110bn aid package to Greece will neither ensure solvency in Greece nor contain the spread of the crisis to other fiscally troubled eurozone countries.
RBC's Strauss said the negative headlines haven't been offset by encouraging rhetoric from eurozone officials.
"So far, nothing has come from official sources, whether at the ECB or politicians, to change the perception in the market," he said. "As a result, we see risk sentiment grinding down and equities markets following that move down and, under that process, the euro under pressure and the dollar coming out on top," Strauss said.
The European debt crisis remains "front and centre and the euro has been unable to resurface above the $1.30 level today after it gave way in North America yesterday," added currency strategists at Brown Brothers Harriman in New York.
In the US, currencies were little affected by news from data processing firm ADP that private-sector employers added 32 000 jobs in April, more than the 20 000 expected by economists surveyed by Dow Jones Newswires.
- I-Net Bridge
Markets reacted to concern that Greece's debt crisis is revealing signs of spreading across the eurozone, while violent protests hit the streets of Athens.
At 15:43 the rand was bid at R7.6460 to the dollar from R7.5545 at its previous close. It was bid at R9.8266 to the euro from its previous close of R9.8095 and was at R11.5492 against the sterling from R11.4378.
The euro was bid at $1.2833 from $1.2965 previously.
A local trader said: "We are seeing some heavy trade as the rand continues to track the euro, which has dipped below $1.29 against the dollar.
"The rand should find support at R7.64-65 against the dollar, however this movement is entirely euro dependant."
One other trader said: "All eyes are on Greece and South Europe at the moment, it's pretty dire, and we are seeing risk aversion as a result. Moody's possible downgrade of Portugal has played a role, and so to have the riots in Greece."
Dow Jones Newswires reported that the euro tumbled to a 14-month low against the dollar on Wednesday, extending earlier losses as news that Moody's Investors Service placed Portugal under review for a downgrade accentuated eurozone sovereign debt fears.
The dollar, a main recipient of safe-haven flows, was higher against all major currencies on Wednesday morning.
European debt crisis remains 'front and centre'
The common currency slipped more than 1% to $1.2803, its lowest level since March 2009, after Moody's put Portugal's Aa2 government bond ratings on review. The rating could fall by one or two notches, the ratings agency said.
That pushed the euro further down versus the dollar, said Matthew Strauss, senior currency strategist at RBC Capital Markets in Toronto.
"The market tends to react...especially if it's on the negative side," Strauss said.
Win Thin, senior currency strategist at Brown Brothers Harriman in New York, agreed the Moody's downgrade warning was the latest trigger.
Further fuelling negative sentiment are reports that three people were killed on Wednesday after demonstrators protesting Greek austerity measures set fire to a bank building in central Athens, he said.
Earlier, a top manager with ratings agency Standard & Poor's said Wednesday the financial rescue plan for Greece isn't a long-term solution for the country's problems, according to the weekly German newspaper Die Zeit.
Markets remain almost exclusively focused on the sovereign debt crisis, with investors deeply concerned that the €110bn aid package to Greece will neither ensure solvency in Greece nor contain the spread of the crisis to other fiscally troubled eurozone countries.
RBC's Strauss said the negative headlines haven't been offset by encouraging rhetoric from eurozone officials.
"So far, nothing has come from official sources, whether at the ECB or politicians, to change the perception in the market," he said. "As a result, we see risk sentiment grinding down and equities markets following that move down and, under that process, the euro under pressure and the dollar coming out on top," Strauss said.
The European debt crisis remains "front and centre and the euro has been unable to resurface above the $1.30 level today after it gave way in North America yesterday," added currency strategists at Brown Brothers Harriman in New York.
In the US, currencies were little affected by news from data processing firm ADP that private-sector employers added 32 000 jobs in April, more than the 20 000 expected by economists surveyed by Dow Jones Newswires.
- I-Net Bridge
