Weaker rand eyes inflation data

2012-11-21 09:22

Johannesburg - The rand was weaker against the dollar on Wednesday, mainly tracking a struggling euro as lack of a resolution to Greece's debt woes knocked risk appetite in general.

Consumer inflation data due out at 10:00 could also move the currency, with a higher-than-expected print likely to cement the view that the Reserve Bank will not cut interest rates when it ends its final policy meeting of the year on Thursday.

At 08:47 the rand traded 0.92% softer at R8.9111/$ after ending Tuesday's New York session at R8.83.

The move mirrored that of the euro, the currency of South Africa's main trading partner bloc, which fell on Wednesday after Greece's international lenders failed to clinch a loan deal for Athens.

"The rand remains vulnerable to any events that could disrupt the funding of South Africa's consumption desires," Tradition Analytics said in a note.

"Yesterday it was the news that France had been downgraded and lost its prized Aaa rating and today it's back to Greece."

The debt problems bedevilling the euro zone region have been a dampener on risk appetite this year, weighing on emerging market currencies like the rand, which has shed more than 10% of its value against the dollar since January.

Government bonds edged slightly higher in early trade and the yield on the benchmark 14-year bond dipped half a basis point to 7.58% while that on the three-year issue was one basis point lower at 5.41%.