The rand was over half a percent weaker against the dollar just before noon, as markets awaited the outcome of a summit to be held this weekend to try to find a solution to the eurozone's debt problems.
|||The rand was over half a percent weaker against the dollar just before noon on Friday, as markets awaited the outcome of a summit to be held this weekend to try to find a solution to the eurozone's debt problems.
“We're waiting to see what will happen at this EU meeting,” a local currency trader said.
“Everyone is saying that liquidity is worse than usual at the moment,” he added.
The trader said that dollar rand would find resistance at 8.27, “but it'll come back to around 8.10 if the euro doesn't retreat.”
He added that it was “the same old story - the rand is being driven by the fortunes of the euro and things are going to be very volatile going into the weekend.”
At 11:26 local time, the rand was trading at 8.1854 to the dollar from its previous close of 8.1401. It was trading at 11.2717 to the euro from 11.2256 before, and at 12.9250 against sterling from 12.8527 previously.
The euro was at US$1.3775 from US$1.3777 before.
Standard Bank currency strategists said in a note on Friday that the rand had weakened further yesterday, dragged down by the unresolved eurozone debt crisis and uninspiring US data.
“Markets are likely to remain preoccupied with developments in the eurozone today as a gathering of finance ministers commences ahead of this weekend's EU summit.
“Given the lack of resolution over the debt crisis and differences between the eurozone's largest economies, France and Germany, sentiment remains nervous.”
Standard Bank anticipated further rand weakness today and into next week if this weekend's summit failed to close with a firm resolution.
Meanwhile Dow Jones Newswires reported that the euro was merely treading water in cautious trade in Europe ahead of further eurozone developments.
Expectations for bold measures coming out of the Sunday summit had already waned after French President Nicolas Sarkozy and German Chancellor Angela Merkel issued a statement on Thursday, conceding that no decisions could be taken by EU leaders on Sunday and promising to produce a comprehensive plan at a second EU summit to be held by Wednesday at the latest.
European Commissioner for Economic and Monetary Affairs Olli Rehn said in an interview with Dow Jones Newswires and The Wall Street Journal that it would still be weeks before Europe could agree on a deal to restructure Greece's debt and that there were significant differences over how to maximise the effectiveness of the European Financial Stability Facility - the bailout fund, currently worth 440 billion euros (US$605 billion).
European officials were discussing a scenario in which governments issuing bonds would borrow from the bailout fund to guarantee a portion of the bond issues.
The euro's outlook largely depended on headlines ahead of the weekend's EU summit, but the bias was slightly downward as some investors were worried that the leaders might not be able to deliver a plan in a timely fashion. - I-Net Bridge
Source: http://www.iol.co.za/rand-slips-vs-dollar-on-eurozone-worries-1.1162356
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