JOHANNESBURG – The rand opened softer against the dollar yesterday after the currency of its main trading partner, Europe, fell due to more worries about Spain’s debt situation and German business data raised fears of slowing growth.
Report by Reuters
The rand was 0,32% weaker at R8,2670 against the dollar from New York’s Monday close of R8,24.
Lower trading volumes were expected yesterday after a national public holiday in South Africa.
“With poor global data and renewed concerns about Europe, EUR/USD is starting to slide again,” Rand Merchant Bank said in a note. “The trend is now downwards, placing some mild upside pressure on USD/ZAR.”
A drop in German business sentiment to its lowest since early 2010 stoked concerns about a slowdown in the eurozone’s largest economy, despite the European Central Bank’s recently announced bond-buying plan.
Spain also remained in focus as its government bond yields rose on concerns Madrid is dragging its feet in requesting the international bailout that most market participants expect.
The yield on South Africa’s three-year bond declined six basis points to 5,33% and that on the longer dated 14-year paper shedding eight basis points to 7,39%.
Treasury were yesterday due to auction R2,1 billion in total of its 2023, 2026 and 2048 government bonds.
“Demand is once again expected to remain robust with activity generally picking up around auctions,” Rand Merchant Bank added.