The rand stayed weak in afternoon trade on Friday, after hitting the lowest point in nearly six months on the back of geopolitical tensions in Egypt and the general sale of emerging market equities.
|||The rand stayed weak in afternoon trade on Friday, after hitting the lowest point in nearly six months on the back of geopolitical tensions in Egypt and the general sale of emerging market equities.
The local unit reached 7.35 against the dollar before lunch. It was last seen at the level on August 31, 2010.
At 16:06 local time, the rand was bid at 7.3044 versus the dollar from its previous close of 7.2696. It was bid at 9.8785 to the euro from 9.8843 before and at 11.6631 against sterling from 11.6881 at its previous close.
The euro was bid at US$1.3527 from US$1.3602 before.
“There are a couple of reasons for continued weakness in the rand. The first one is the general sell-off in emerging market equities, fuelled by inflation fears, and the second is the broad-based dollar strengthening due to tensions in Egypt,” Michael Keenan, head of foreign exchange research at Standard Bank, said.
“These two forces have pushed the rand to these weak levels,” Keenan added.
Meanwhile, Dow Jones Newswires has reported that the dollar strengthened broadly on Friday, as simmering political instability in Egypt sent nervous investors flocking to the US currency as a safe-haven from potential fallout from President Hosni Mubarak's decision to remain in office until September.
Underpinned by constructive US data that are pushing up bond yields, the dollar is seen benefiting from global risk-aversion. Analysts also say that yield differentials between US, Japanese and European debt are beginning to favour the dollar, at least in the short term.
As a result, traders are increasingly wary of buying the euro, which in a risk-averse environment has sold off sharply. The single currency has been hamstrung by European Central Bank (ECB) succession politics and the as yet unresolved euro-zone debt crisis.
The euro was trading at $1.3525 against the dollar, compared with $1.3600 late on Thursday in New York. The dollar was at Y83.56 against the yen, the day's high, compared with Y83.22, while the euro was at Y113 compared with Y113.13. Meanwhile, the pound was trading at $1.5994 against the dollar, compared with $1.6093 late Thursday in New York. - I-Net Bridge
Source: http://www.iol.co.za/rand-near-6-month-low-vs-us-dollar-1.1025105
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