* Rand vulnerable, liquidity thin
* Bonds steady, stock futures down
JOHANNESBURG Dec 19 (Reuters) – South Africa’s rand
weakened against the dollar on Monday and will likely remain
under pressure as news of North Korean leader Kim Jong-il’s
death sent investors to safe-haven assets such as the U.S.
currency.
The rand was poised to end the year down more than 20
percent against the dollar, battered by risk aversion as the
euro zone debt crisis deepened.
Ratings agency Fitch warned on Friday it might downgrade
France and six other euro zone countries as it believed a
comprehensive solution to the region’s debt crisis was
“technically and politically beyond reach”, making investors
even more cautious.
The rand was trading at 8.3850 against the dollar,
not far from Friday’s New York close of 8.3750.
“Given dollar/rand’s sensitivity to the euro we wouldn’t
rule out wide swings, especially with thinning liquidity. Fresh
risk aversion could see it test this year highs at 8.60 once
again,” market analysts 4CAST said in a note.
The rand hit 2-1/2 year lows at 8.61 in November and has
remained vulnerable, failing to break firmer than than the
psychologically key level of 8.00/dollar despite several
attempts.
With some dealers off for holidays, trading volumes will be
thinner, rendering the currency vulnerable to wide moves.
Stocks looked set to open weaker, with the JSE’s Top-40
March futures contract down more than one percent before the
start of trade at 0700 GMT.
Government bonds were largely steady, with the 2015 bond
up one basis point to 6.95 percent and that on the
2026 issue unchanged from the previous close at 8.705
percent.
(Reporting by Phumza Macanda; editing by David Dolan)
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