The rand was softer against the dollar in early morning trade on Tuesday. It tracked a euro that had been forced to take in the news that Moody's had cut some European nations' sovereign ratings.
"The rand isn't doing too badly considering the chaos brought about by Moody's ratings," a local currency trader said.
"I put dollar rand in an initial range of 7.68 to 7.78 and we'll just be following the euro to see what the single currency does today."
At 08:35 local time, the rand was bid at R7.7250 to the dollar from its previous close of R7.6985. It was bid at R10.1450 to the euro from R10.1205 before, and at R12.1125 against sterling from R12.0932 previously.
Gold was trading at US$1716.45 per ounce.
The euro was bid at US$1.3131 from its previous close of US$1.3153.
RMB said in a note that the eurozone finance ministers meeting on Wednesday was likely to be a make or break point for Greece. EU officials were openly sceptical about whether they would follow through on their recent budget commitments, given the years of procrastination and broken promises.
However, the core view should remain that Greece would get its second bailout approved tomorrow, RMB added.
Sentiment had been knocked by Moody's rating adjustments of some European sovereigns, including France, Italy and the UK. RMB added that global markets were in for a tougher time today.
"USD/ZAR is seemingly set to test Friday's high of 7.75. This partly reflects a stronger US dollar and the rand is set to do a little better on the other crosses: EUR/ZAR seems fairly stable in the 10.10 - 10.15 area and GBP/ZAR is bouncing around 12.10."
Nevertheless, the bullish bias on the rand had been broken last week and clearly had not been reclaimed. Therefore risks would switch the other way.
"Trade today is likely to remain dominated by the Greek issue but we will also receive two key data points: the German ZEW index at midday and US advance retail sales in the afternoon," RMB said.
Meanwhile Dow Jones Newswires reported that earlier in the Asian trading session on Tuesday, Moody's Investors Service had downgraded six European nations' sovereign ratings and lowered its outlook on the UK.
Investors' focus would now shift to a meeting of eurozone finance ministers on Wednesday to see whether Greece would be able to smoothly secure fresh aid that was necessary to avoid a disorderly default, said Masafumi Yamamoto, chief currency strategist at Barclays Capital.
"Greece has such a long path ahead to avoid a disorderly default, and there are many risk scenarios surrounding that path," he said.
Bonds weaker ahead of auction
South African bonds were weaker in early morning trade on Tuesday, in line with the rand, ahead of the weekly government bond auction.
The National Treasury will auction R500 million worth of R204 bonds, R500 million worth of R207 bonds and R1.1 billion worth of R213 bonds at 11:00.
Absa Capital said in a morning report that the yield curve shifted lower in a parallel fashion yesterday, but given that today was an auction day and that the rand was softer this morning they expected yields to drift higher again this morning.
At 08:50, the benchmark R157 bond was trading at 6.635 percent, from its previous close of 6.565 percent. The R207 was bid at 7.820 percent and offered at 7.790 percent from a previous close of 7.745 percent and the R186 was trading at 8.310 percent from its close of 8.230 percent.