The rand kept a softer bias in afternoon trade on Thursday, tracking the euro/US dollar movement, as attention switched back to Spain’s fiscal woes after the US Federal Reserve’s statement.
At 15:58 the rand was bid at R8.2667 to the dollar from Wednesday’s close of R8.1984. It was bid at R10.4300 to the euro from its previous close of R10.4102 and at R12.9341 against sterling from R12.8877 before. The euro was bid at US$1.2627 from Wednesdays’s close of $1.2691.
"The risk-off scenario is slowly creeping back in after the Fed’s disappointing statement," said Lynden Reabow, FX trader at PSG Prime.
The US Fed extended its Operation Twist programme - whereby the central bank sells short-term Treasury bills and puts the money into longer-term securities - by $267bn through to the end of 2012.
The Fed also revised down its economic growth forecasts for the US from 2.4 percent–2.9 percent at the previous FOMC meeting to 1.9 percent–2.4 percent.
"I think the rand is trying to consolidate around this level following the strong run it had in recent sessions. I would not describe the current levels as risk-off trade," said Malcolm Charles, a portfolio manager at Investec Asset Management.
Meanwhile, Spain's borrowing costs leapt in a major bond market test as Madrid prepared to unveil the price of a banking rescue that has stoked fears of a full-blown bailout, according to Dow Jones Newswires.
Bonds soften on easier rand
South African bonds were softer in afternoon trade on Thursday on the back of a weaker rand.
At 16:00‚ the benchmark R157 bond was trading at 6.020 percent after touching a record low of 5.940 percent in the morning from Wednesday’s close of 5.960 percent and Tuesday’s close of 6.040 percent.
The R207 was bid at 7.250 percent and offered at 7.230 percent from a previous close of 7.190 percent and the R186 was trading at 8.030 percent from its previous close of 7.950 percent.
The rand was bid at R8.2689 against the dollar from Wednesday’s close of R8.1984.