The rand remained firm in midday trade on Tuesday‚ despite growing concerns that Greece’s elections may revive fears of that country exiting the eurozone.
“The rand hasn’t moved much this morning. The uncertainty in Europe is preventing the euro from making any gains. People are pretty anxious and won’t take risks ahead of the Greek polls‚” a local trader said.
RMB said with the long-anticipated Greek elections scheduled to take place over the coming weekend‚ the next two weeks should be very interesting.
“As highlighted before‚ if an anti-austerity party wins‚ there is a high probability that the government will fail to receive the necessary funding to run the country and may decide to exit the Eurozone. An exit will increase the likelihood of a severe market fallout and significant rand weakness as the market contemplates whether Spain is also on its way out of the Eurozone‚” RMB said.
At 12:02 the rand was bid at R8.4181 to the dollar from Monday’s close of R8.4625. It was bid at R10.5368 to the euro from its previous close of R10.5486 and at R13.0678 against sterling from R13.0927 before. The euro was bid at US$1.2514 from Monday’s close of $1.2466.
Gold was trading at US$1590.52 per ounce.
“We are still euro dependent. The euro stabilised this morning and the rand is following it. Local markets are generally following developments in Europe at the moment‚”a local trader said.
European authorities at the weekend agreed to support Spain’s request for financial assistance to recapitalise its banks. A loan‚ estimated at EUR100bn‚ will be provided by the European Financial Stability Facility and the European Stability Mechanism. The actual size of the loan will be determined after an external private audit is completed on June 21.
Bonds stay quiet after auction
The South African bond market remained quiet in midday trade on Tuesday despite a well bid weekly Treasury bond auction at 11:00.
The South African Treasury on Tuesday allotted R500 million worth of R204 bonds at a clearing yield of 7.150 percent‚ R800 million worth of R213 bonds at a clearing yield of 8.710 percent and R800 million worth of R209 bonds at a clearing yield of 8.910 percent. The bids amounted to R3.29 billion‚ R2.055 billion and R1.725 billion respectively.