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Johannesburg - The rand was a tad weaker against the dollar in midday trade on Tuesday as it tracked a euro made vulnerable by Europe's seeming inability to manage the eurozone debt crisis.
"The markets are still focused on the single currency and there are questions as to why the euro isn't a lot lower due to what's going on at the moment," a local rand trader said.
"There seems to be no clear direction for the euro and that's where the rand gets its direction. The next big event that might move the currencies is the budget vote in the Italian parliament later today," he said.
At 11:45 local time, the rand was trading at 7.9399 to the dollar from its previous close of 7.9266. It was trading at 10.9268 to the euro from 10.9103 before, and at 12.7510 against sterling from 12.7321 previously.
The euro was at $1.3771 from $1.3758 previously.
Standard Bank analysts said in its morning report that after opening at R7.89 on Monday, the rand drifted weaker in concert with a weaker euro and persistent fears about the sovereign debt of Greece and, more recently, Italy.
"Once again, safe haven assets such as gold, the dollar and also the yen are being well bid.
"Greece's national unity talks are proving sluggish. This is disconcerting, considering that Greece needs to rapidly reach a consensus so as to secure a further financial bailout from the troika of lenders in order to avoid a default within the next month," Standard Bank said.
The group noted that Italy's budget vote today would be a barometer of President Silvio Berlusconi's popularity.
"If he fails to secure a parliamentary majority, he might either resign or Italy might conduct an election to oust him. Italian bond yields have been soaring because the market believes that Berlusconi doesn't have the support needed to implement the austerity measures required to reduce Italy's $2.6 trillion debt burden."
The bank said that if these measures were not introduced, the European Central Bank (ECB) might refrain from buying Italian debt, thereby increasing the likelihood that Italy would also need a bailout or incur a default.
"Hence, unless Berlusconi achieves a vote of confidence, we would expect risky assets to come under renewed pressure today. We therefore would buy dollars, with a target of R8.06 over the short term," it said.
Meanwhile, Dow Jones Newswires reported that in European trading hours the euro strengthened against the dollar, but traders said that the single currency remained vulnerable to the political story unravelling in Italy.
"The markets are still focused on the single currency and there are questions as to why the euro isn't a lot lower due to what's going on at the moment," a local rand trader said.
"There seems to be no clear direction for the euro and that's where the rand gets its direction. The next big event that might move the currencies is the budget vote in the Italian parliament later today," he said.
At 11:45 local time, the rand was trading at 7.9399 to the dollar from its previous close of 7.9266. It was trading at 10.9268 to the euro from 10.9103 before, and at 12.7510 against sterling from 12.7321 previously.
The euro was at $1.3771 from $1.3758 previously.
Standard Bank analysts said in its morning report that after opening at R7.89 on Monday, the rand drifted weaker in concert with a weaker euro and persistent fears about the sovereign debt of Greece and, more recently, Italy.
"Once again, safe haven assets such as gold, the dollar and also the yen are being well bid.
"Greece's national unity talks are proving sluggish. This is disconcerting, considering that Greece needs to rapidly reach a consensus so as to secure a further financial bailout from the troika of lenders in order to avoid a default within the next month," Standard Bank said.
The group noted that Italy's budget vote today would be a barometer of President Silvio Berlusconi's popularity.
"If he fails to secure a parliamentary majority, he might either resign or Italy might conduct an election to oust him. Italian bond yields have been soaring because the market believes that Berlusconi doesn't have the support needed to implement the austerity measures required to reduce Italy's $2.6 trillion debt burden."
The bank said that if these measures were not introduced, the European Central Bank (ECB) might refrain from buying Italian debt, thereby increasing the likelihood that Italy would also need a bailout or incur a default.
"Hence, unless Berlusconi achieves a vote of confidence, we would expect risky assets to come under renewed pressure today. We therefore would buy dollars, with a target of R8.06 over the short term," it said.
Meanwhile, Dow Jones Newswires reported that in European trading hours the euro strengthened against the dollar, but traders said that the single currency remained vulnerable to the political story unravelling in Italy.
