Shaky rand falls against dollar

Johannesburg - The rand weakened against the dollar on Friday, hovering around a key support level that, if breached, could see it tumble to R8.27, as happened in its previous session.

Renewed fears about a solution to Europe's debt crisis, which has investors moving their money out of emerging markets, are most likely to be the main drivers of the currency this session.

Dealers are bracing for a volatile day while risky assets remain under selling pressure ahead of an EU summit this weekend.

By 06:42 GMT the rand was at R8.1885 to the dollar.

“The break above R8.18 has nullified the triangle formation we have been favouring, and given the event risk this weekend the rand is likely to continue to bear the brunt of any nervousness,” said Judy Padayachee, technical strategist at Absa Capital.

European finance ministers are meeting today ahead of a summit this weekend to try and resolve the region’s debt crisis.

However Germany and France have said a decision will not be taken before a second meeting, probably on Wednesday, depressing markets.

“As such the R8.35 level could be reached, with the next target thereafter at R8.70,” said Absa’s Padayachee.

Government bonds were pressured by the weak currency and the long end of the curve saw heavier selling as investors shied from holding long positions given the global uncertainty.

The yield on the 2015 bond gave up three basis points to 6.76% while the longer duration 2026 stock added 8.5 basis points to 8.45%.