Johannesburg - The rand tumbled almost 1% against
the dollar in noon trade on Thursday, as it tracked a euro that had slid
against the greenback as investors worried about delayed Greek bailout
negotiations.
"The negativity surrounding the euro is the biggest driver in the market," a local currency trader said.
"The market is becoming more and more sceptical about a
successful outcome where Greece is concerned and the rand is suffering
on the back of that.
"I think the dollar rand will weaken further to around 7.88," he said.
At 11:36 local time, the rand was bid at R7.8331 to the dollar
from its previous close of R7.7619. It was bid at R10.1923 to the euro
from R10.1273 before, and at R12.2822 against sterling from R12.1638
previously.
The euro was bid at $1.3006 from its previous close of $1.3054.
RMB said in a note on Thursday markets were now solidly in a risk-off environment due to Greek concerns.
"The eurozone finance ministers will meet on Monday to decide
whether to approve the second bailout.
"Greek politicians have assured
the public that it will be forthcoming but EU members are openly
questioning Greece's willingness to implement what they have promised,
especially given that they will have a new government in a few months."
As a compromise, Greece would most likely receive the funds
needed to avoid a disorderly bankruptcy in March but the rest of the
cash would become contingent on budget implementation.
RMB said global markets had not taken these concerns very well, with all risky assets taking a hit.
"Yields of the other PIIGS (Portugal, Italy, Ireland, Greece and Spain) have started to worsen again, after
five solid weeks of improvement. This suggests that this risk-off
environment could last longer than the news headline.
"We wouldn't get carried away though: since December the
markets have shown a lot of resilience to the Greek story - almost as if
the worst is now expected and that the daily news swings are not that
important. Risk could be back on by next week."
Meanwhile, Dow Jones Newswires reported that eurozone
sentiment had soured amid ongoing uncertainty over the Greek bailout
situation.
Greece could push the euro dollar rate to $1.26, as the bad
news about Greece's bailout delays was starting to filter through to
markets and price action after a surprisingly quiet few days in currency
markets, Societe Generale said.
The pair had slipped below major support at $1.3025 and a move
back towards $1.26 seemed likely, unless there was a significant thaw
in the relationship between Greece and Northern Europe, the bank noted.