The rand traded lower‚ but regained some lost ground in late trade on Tuesday‚ supported by some foreign inflow due to local bond buying. The rand was driven lower by negative international worries‚ the high cost of Spanish borrowing and a weak euro.
“The rand was on the back foot this morning due to investor jitters regarding eurozone trouble and Spanish yields being at an all time high today. The US dollar 10 year treasury index was also at a low. The weaker rand tells you there was a flight to safe havens and risk-off sentiment causing investors to sell off the rand and buy dollars‚” said Lynden Reabow‚ foreign exchange sales trader at PSG Prime stockbrokerage in Cape Town.
At 16:10 local time the rand was bid at R8.4711 to the dollar from its previous close of R8.4516. It was bid at R10.2471 to the euro from its previous close of R10.2429 and at R13.1488 against sterling from R13.1092 before.
The euro was bid at US$1.2097 from its previous close of $1.2120.
Meanwhile Greece was back in the spotlight and will meet later today with creditors to renegotiate its bailout funding. Concerns were also mounting that Spain might need a second bailout‚ with talks scheduled on Tuesday between the finance ministers of Spain and Germany.
Dow Jones Newswires reported that with Moody’s cutting its outlook on Germany‚ the Netherlands and Luxembourg‚ 12 of the 17 eurozone nations now had a negative ratings outlook‚ meaning a downgrade was not out of the question‚ and two others were on watch for a downgrade. The only two countries with stable outlooks were Finland and Estonia‚ while there was no current outlook for Greece. With a negative outlook or review on nearly every member of the eurozone‚ expect the downgrades to keep coming. - I-Net Bridge