The rand was weaker in afternoon trade on Friday‚ tracking global markets‚ ahead of Chinese data to be released this weekend.
Analysts said the was concern that China’s interest rate cut earlier in the week was a pre-move action ahead of poor data.
At 15:44 the rand was bid at R8.4624 to the dollar from Thursday’s close of R8.3966. It was bid at R10.5294 to the euro from its previous close of R10.5495 on Thursday and at R13.0333 against sterling from R13.0361 at its previous close. The euro was bid at US$1.2449 from Thursday’s close of $1.2567.
The local currency market was under pressure from the morning session on increasingly depressed global sentiment.
Comments by US Federal Reserve chairman Ben Bernanke on Thursday pouring cold water on expectations of imminent stimulus measures‚ hit emerging markets‚ which were already exposed to the eurozone debt crisis.
“The market has been risk-off and tentatively waiting for the Chinese data coming out this weekend. The data will show whether there is growth in the Chinese market or not. The rand weakened mainly because SA is a commodity-based economy‚” a local trader said.
Meanwhile Dow Jones reports that the euro drifted lower in European trading hours on Friday‚ despite reports that Spain could be set to request international aid for its struggling banks as soon as this weekend.
Just one day after Fitch Ratings delivered a three-notch downgrade to Spanish debt‚ a euro-area official told Dow Jones Newswires that aid for the country was a “likely” topic for a teleconference among European Union finance ministers and other senior officials this weekend. There had not yet been a decision on how or when to provide support for the country‚ the official added.
Earlier‚ European Central Bank governing council member Ewald Nowotny said it would be sensible for Spain to seek assistance for its troubled banking sector before the price of aid became too expensive.
“We think it’s sensible to do that‚ because the longer one waits to take reform steps‚ the more expensive it gets‚” Nowotny told reporters on the sidelines of a press conference.
However‚ traders and investors proved themselves reluctant to push the euro higher‚ with the common currency dribbling down to the day's low of $1.2446 against the dollar.
“The reaction in the euro has been very anaemic. Caution remains as the news solidifies speculation that Spain is in trouble‚” said Lauren Rosborough‚ a currency strategist at Societe Generale in London.
Safe-haven flows prop up bonds
South African bonds were softer in quiet afternoon trade on Friday‚ but supported by safe-haven flows as global equity markets suffered yet another sell-off.
At 15:46‚ the benchmark R157 bond was trading at 6.275 percent from Thursday’s close of 6.230 percent‚ Wednesday’s close of 6.260 percent and Tuesday’s close of 6.330 percent. The R207 was bid at 7.550 percent and offered at 7.520 percent from a previous close of 7.500 percent and the R186 was trading at 8.290 percent from its close of 8.245 percent.
The rand was bid at R8.4631 against the dollar from Thursday’s close of R8.3966‚ Thursday’s best level of R8.2154 and a worst level on Monday of R8.6291.