JOHANNESBURG Feb 14 (Reuters) – The South African
rand weakened against the dollar on Tuesday as ratings
downgrades in Europe weighed further on investor risk sentiment
and pushed local factors into the background.
Government bonds fell in tandem, pulling yields on the
benchmarket three-year and 14-year bonds 7.5
basis points higher to 6.65 percent and 8.32 percent
respectively.
At 0655 GMT, the rand was 0.37 percent softer at 7.707
against the dollar, the sixth weakest performer in a basket of
20 emerging market currencies tracked by Reuters. It closed on
Monday at 7.6785.
“It’s all because of Moody’s and the sovereign ratings last
night although they were not a major surprise, to be honest. We
all know Europe’s a massive mess and the ratings agencies have
lost a lot of credibility,” Standard Bank dealer Warrick Butler
said.
Moody’s downgraded several European countries, including
Italy, and said it may cut its triple-A ratings on France,
Britain and Austria but market watchers said the news was hardly
surprising given the debt crisis playing out in the region.
“I don’t really expect too many fireworks today. There’s a
good resistance level at 7.74 and we’re looking to play the
range 7.65-75. The rand really seems to be dominated by external
factors at the moment,” Butler said.
Local factors have had little impact on financial markets in
recent months, although a cryptic central bank statement last
Friday hit the currency by triggering speculation of a major
monetary policy shift or the departure of a senior official.
The statement said there would be an announcement of
“national importance” over the weekend, although it turned out
to be merely the introduction of new bank notes honouring former
President Nelson Mandela.
Governor Gill Marcus apologised for the confusion caused.
(Reporting by Stella Mapenzauswa; Editing by Ed Cropley)
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