JOHANNESBURG Jan 5 (Reuters) – South Africa’s rand
was on the back foot against the dollar on Thursday after
shedding as much as 1.6 percent the previous session, with euro
zone debt worries rekindling aversion towards emerging market
assets perceived as carrying higher risk.
Government bonds added to the previous day’s losses, with
traders pointing to prospects of increased supply when the
National Treasury resumes its weekly auctions next week after a
brief hiatus for the just-ended festive holidays.
At 0641 GMT the rand was at 8.1750 against the
dollar, down 0.65 percent from Wednesday’s close at 8.1250.
It tracked the euro, the currency of South Africa’s main
trading partner, which came under pressure as markets refocused
on concerns about the euro zone debt crisis ahead of a French
debt auction later in the session.
“The euro started the year fairly perky but seems to have
lost its lustre a little bit and on the back of that, below 8.10
there seems to be fairly good demand for dollar/rand,” a
Johannesburg trader said.
“I would imagine the rand is going to continue tracking the
usual suspects, that is the euro and other emerging markets. If
anything we could tend a bit weaker but maybe not at such a
rapid pace,” he said, adding markets were starved of any
domestic data or news at the moment to drive the currency.
On the debt market, bonds extended Wednesday’s losses, with
the yields on the heavily traded 2015 and 2026
issues each adding 2.5 basis points to 6.875 percent
and 8.66 percent respectively.
“Yields fell over the last two weeks with no liquidity and
now it’s just sanity prevailing,” Investec bond trader Steve
Arnold said.
“Also a slightly weaker rand and an announcement of next
week’s bond auciton has seen a little bit of profit-taking,” he
added.
Continued…
