Johannesburg - The rand fell 1.4% to a three-week low against the dollar on Tuesday, as debt problems in some European countries dented investors' risk appetite and also in a correction after last week's three-year highs.
In Tuesday late afternoon trade, the unit traded at R6.7851/$ after earlier touching a session low of R6.8125/$, its softest level since April 19.
"Current rand weakness is a function of two things. The markets had rallied to the extent that some asset classes were beginning to look expensive. Commodities have seen a strong rally, and were due a correction," said Roderick Ngotho, CEEMEA forex strategist at RBS in London.
"This has hurt rand as a currency of a commodity exporter. Additionally, the rand itself is relatively overvalued (little debate here), and when the market generally corrects, it too sees a correction (rand weakness) for being expensive," he said.
The rand also tracked the euro, which fell against the dollar in volatile trade as conflicting reports emerged of a potential new aid deal for debt-laden Greece to help it meet its funding requirements in the next two years.
In Tuesday late afternoon trade, the unit traded at R6.7851/$ after earlier touching a session low of R6.8125/$, its softest level since April 19.
"Current rand weakness is a function of two things. The markets had rallied to the extent that some asset classes were beginning to look expensive. Commodities have seen a strong rally, and were due a correction," said Roderick Ngotho, CEEMEA forex strategist at RBS in London.
"This has hurt rand as a currency of a commodity exporter. Additionally, the rand itself is relatively overvalued (little debate here), and when the market generally corrects, it too sees a correction (rand weakness) for being expensive," he said.
The rand also tracked the euro, which fell against the dollar in volatile trade as conflicting reports emerged of a potential new aid deal for debt-laden Greece to help it meet its funding requirements in the next two years.