* EM currencies under pressure as euro zone worries
resurface
* Local bonds also fall as investors seek safe havens
JOHANNESBURG May 7 (Reuters) – South Africa’s rand softened
against the dollar on Monday and government bonds followed suit
as risk sentiment turned sour after electoral upsets in Europe
raised concerns that bail-out plans for the debt-ridden region
might veer off track.
Europe is a key market for South African exports and a
gloomy economic outlook there tends to weigh on the rand.
By 0650 GMT the rand was trading 0.392 percent
weaker at 7.8599 against the dollar from Friday’s close at
7.8350.
“We’re following the euro which has weakened quite a lot on
all those elections results over the weekend,” RMB trader Jim
Bryson said.
The rand’s weakness mirrored that of the euro, which was on
the back foot against the greenback after elections in Greece
and France raised fresh concerns the euro zone’s hard-earned
bailout and austerity steps could fall apart.
“It is a UK holiday today which may reduce the impact
somewhat of these elections,” Bryson added. “We might just have
a bit of a quieter day than normal.”
The local debt market was not spared as investors dumped
emerging market assets in favour of so-called “safe havens” such
as U.S. Treasuries.
Continued…
