Johannesburg – The rand weakened on Thursday afternoon as traders reacted to disappointing local data and worries that the EU was sliding further into recession.
“South African manufacturing data out earlier today was extremely negative for the rand. Mine production‚ which also came out today was also very negative for the rand. The mine production was not a huge shock as it was expected due to the strikes in the mining industry‚” said Mark Kalkwarf‚ a senior portfolio manager from the Iquad Group.
At 3.39pm‚ the rand was bid at R8.7139/$ from Wednesday’s close of R8.6375. It was bid at R11.1002 to the euro from its previous close of R11.0120 and at R13.9266 against sterling from R13.7892 before.
The euro was bid at $1.2737 from Wednesday’s close of $1.2755.
“The weak demand for Spanish bonds today was not good for global risk appetite. The euro lost ground due to growth concerns from the UK. The German finance minister said it was too early to make a decision on Greece’s bailout next week. This is negative as this could mean Greece won’t get the bailout they need‚” he added.
“Anything that is negative for the euro is negative for the rand. Rumours that the ECB is not ready to start a bond buying programme next week has put extra pressure on the euro and is not good for liquidity. Liquidity is important for emerging markets and the rand‚” Kalkwarf said.