The rand recovered to below 8.50 per dollar in quiet afternoon trade on Monday as the Queens Diamond Jubilee celebrations on Monday and Tuesday meant that South African traders could take a breather after a volatile week last week.
The euro is bouncing back to the $1.25 per dollar level so we have moved stronger as well. Whenever we have some stability then the rand moves stronger as it offers a higher yield than other emerging market currencies but when risk comes back then we tend to be sold off as we offer good liquidity a local trader said.
At 16:01 the rand was bid at R8.4887 to the dollar from Fridays close of R8.5721 and Thursdays close of 8.5006. It was bid at R10.5984 to the euro from Fridays close of R10.6705 and Thursdays close of R10.5131 and at R13.0676 against sterling from R13.1904 at Fridays close and R13.0997 at Thursdays close. The euro was bid at US$1.2491 from Fridays close of $1.2418 and Thursdays close of $1.2364.
Dow Jones Newswires reported that the euro traded with a mildly upbeat tone in European hours on Monday but moves were muted as London traders stayed away from their desks to celebrate the Queen's jubilee and as data releases were thin on the ground.
The single currency pared some of its losses towards the end of the anaemic London session but remained under pressure against most of its major counterparts. The currency hit the day's low against the dollar at $1.2375 in Asian trading but recovered its poise somewhat after data showed a slight fall in Spanish unemployment in May.
The currency shrugged off benign eurozone producer price data that came in a touch below expectations at 2.6 percent on the year in April raising hope that the European Central Bank will announce more measures to fight stagnant growth and the detrimental effects of the European debt crisis.
Portugal's announcement that the country's EUR78bn bailout programme was on track and international creditors did not require further adjustments helped the euro recover its early losses. Portugal also said it would inject EUR6.65bn into its ailing banking system in an attempt to strengthen the country's banks.
Emerging market currencies traded with a steady tone. The Turkish lira strengthened against the dollar after Turkey's annual inflation rate eased to single digits for the first time since November.
Bonds little changed despite rand
South African bonds were little changed in quiet afternoon trade on Monday as the UK holiday robbed the market of liquidity.
We did nothing most of the day with London out of the market. Bonds ignored the rands movements as they did on Friday. I guess we will have to wait until Wednesday to get direction as the UK is off again tomorrow a local trader said.
At 15:50 the benchmark R157 bond was trading at 6.350 percent from Fridays close of 6.340 percent and Thursdays close of 6.390 percent. The R207 was bid at 7.655 percent and offered at 7.625 percent from a previous close of 7.620 percent and the R186 was trading at 8.390 percent from its close of 8.360 percent.