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Johannesburg - The rand eased against the dollar on Tuesday,
breaching the key R7.00 psychological barrier that traders say may open a
series of weaker levels if worries about US and European debt intensify.
Government bonds were slightly firmer in a quiet start to
the session but dealers said bond prices would probably follow the rand lower
until inflation and retail sales data due on Wednesday.
Investors are waiting for results of a weekly debt auction
at 09:00 GMT, with dealers expecting mediocre demand, as last week.
Treasury has offered R1.3bn of 2017 notes and R800m in 2021
paper .
The rand was steady, with a weaker bias, at R6.9725. It
closed at R6.9715 in New York on Monday.
European and US debt problems have pressured emerging market
currencies as investors flock to safer assets such as gold, which hit an all
time high of $1 607 an ounce on Tuesday.
"The rand, which is regarded by many as one of the best
barometers of global risk appetite, has been particularly hard hit,"
Standard Bank said in a note.
"It has weakened against all of the active trading
currencies over the past week and, year-to-date, is the second-worst-performing
currency after the Turkish lira."
The yield on the 2015 note was down 2.5 basis points to
7.51% and that on the 2026 paper nudged down to 8.975%.
"A quiet morning but it's all dependent on the currency
until we get inflation and retail sales numbers out the way tomorrow," a
local bond dealer said.
"Everyone is very confused with what is going on
globally. That picture is a bit of a concern for everyone," he added.
