The rand was range-bound in quiet morning trade on Monday as traders said the local unit would take its cue from the euro‚ which was trading near the $1.25 per dollar level.
"We have yet another European Union summit later this week‚ so we expect range bound trade for most of this week‚" a local trader said.
At 09:01 the rand was bid at R8.4301 to the dollar from its previous close of R8.4113. It was bid at R10.5333 to the euro from its previous close of R10.5444 and at R13.1200 against sterling from R13.1068 before. The euro was bid at US$1.2507 from its previous close of $1.2541. The rand was last below R8 per dollar on May 10.
RMB said in its morning comment that the rand remains oversold but rather than recovering‚ is continuing to weaken.
"It’s possible that the rand will make up some lost ground this week but there seems no chance of really good news that could spur any fireworks. Rather look for a continuation of the broad 8.25 – 8.50 range‚" the bank said.
"The euro dollar remains the main driver of rand dollar. At $1.2550‚ it is bang in the middle of the range since mid-May. Speculators have eased off their short euro positions but no-one seems to think it can break 1.2750‚ directionless view on the rand dollar‚" it added.
"The event of the week is the EU summit on Thursday and Friday — the 19th summit since the crisis started. Greece will formally request an easing of their bailout terms. There is a threat that the new government could topple‚ unless it receives some concessions. Importantly‚ the leaders will a discuss move towards a fiscal and banking union as well as debt mutualisation‚ i.e. all the things that could bring an end to the crisis. It’s expected that we’ll receive vague promises‚ especially on banking but nothing concrete enough to cheer the markets‚" the bank said
Bonds follow rand weaker
South African bonds were a touch softer in quiet morning trade on Monday as bonds tracked the weaker rand.
At 09:16‚ the benchmark R157 bond was bid at 6.050 percent and offered at 6.030 percent from Friday’s close of 6.010 percent and Thursday’s close of 6.030 percent. The R207 was bid at 7.195 percent and offered at 7.175 percent from a previous close of 7.180 percent and the R186 was bid at 8.030 percent and offered at 8.010 percent from its previous close of 7.990 percent.
The rand was bid at R8.4294 against the dollar from Friday’s close of R8.4113 and Thursday’s close of R8.3794.