The rand remained softer against the dollar in noon trade on Monday as it tracked a restless euro.
Investors became nervous after the International Swaps and Derivatives Association's (ISDA) declaration on Friday that a credit event had occurred with Greece's debt while disappointing data from China had not helped the single currency.
“The rand is doing very little at the moment - dollar rand has only moved a few cents so far during our trading session,” a local currency trader said.
“There has, however, been good buying interest from all quarters locally, although exports have hung back a bit.”
The trader added that risk was off after data out of China was released earlier.
“The euro has improved a little during the session, but there's nothing to give it direction.”
At 11:43 local time, the rand was bid at R7.5607 to the dollar from its previous close of R7.5458. It was bid at R9.9260 to the euro from R9.8815 before, and at R11.8579 against sterling from R11.8535 previously.
The euro was bid at US$1.3125 from its previous close of US$1.3122.
Standard Bank said in a note that the rand's weakness was being further aggravated this morning by China's announcement that its latest trade data reflected the biggest trade deficit in at least 22 years.
This had rekindled fears of a “hard landing” for the Chinese economy and, by extension, the global economy.
“With the ECB LTRO [long term refinancing operation] behind us and the possibility of further QE from the Fed in doubt, much of what was keeping markets buoyant over the past months has faded - which will likely weigh on risky assets.
“It also implies that Bernanke's tone at this week's post-FOMC press conference could be of especial importance.”
Meanwhile Dow Jones Newswires reported that investors were weighing up what the Greek credit event meant going forward, following the announcement by the ISDA.
Societe Generale said: “This helps the integrity of the credit default swaps market but adds to the nervousness in markets.
“Netting out exposure in Greek CDS [credit default swaps] will provide scope for speculation about whether this can open a can of worms and with the precedent of a eurozone default now having been set, some will wonder if this increases risk of contagion. So yet another Monday morning starts with a slight risk-off mood.”
These issues overshadowed better-than-expected nonfarm payrolls data, issued on Friday. - I-Net Bridge