JOHANNESBURG The rand was softer against the dollar in noon trade yesterday as it tracked a euro that had seen its rally lose some momentum.
We opened up slightly weaker against the dollar than other currencies, a local currency trader said. Well take our direction from the euro which always seems to be waiting for the next headline, he said.
However, despite the euros rally waning he insisted the environment was still supportive of risk. Dollar rand will probably move back to 7,58 as long as there are no major events in Europe today, he said.
At 11:37 local time, the rand was bid at R7,6317 to the dollar from its previous close of R7,5889. It was bid at R10,2455 to the euro from R10,2107 before, and at R12,0836 against sterling from R12,0317 previously.
The euro was bid at $1,3423 from its previous close of $1,3467.
Meanwhile, Dow Jones Newswires reported that the rally in the euro had been expected to fail because of the absence of sustained support from fundamentals such as falling sovereign debt risks.
Our main concern is that, with some positives already in the euro price, potential disappointments like smaller long-term refinancing operation take-up and/or a potential delay in the Greek bailout package this week due to unaddressed prior actions, for example, could put the euro under renewed selling pressure, Citi FX strategists said.
Moodys Investors Service yesterday also delivered a reality check to markets by saying the agreement on a second bailout programme for Greece was an important step forward, but the risk of default after a proposed distressed exchange with private sector creditors remained high.
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Greeces debt burden will remain large for many years, and the country is unlikely to be able to access the private market after the second assistance package runs out, said Moodys, also highlighting elections expected in April as a potential source of political and implementation risk.
