Rand stays above 8 to the US dollar

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IOL world currency3 Graphic: renjith krishnan

The rand stayed above R8 per dollar in afternoon trade on Friday as bad news from around the world sent investors scurrying for safe haven currencies such as the dollar and yen.

“The support at R8.12 has held so far, but it was touch and go at one stage, as there is so much bad news hitting the wires at the moment,” a local trader said.

At 16:05 local time the rand was bid at R8.0736 to the dollar from a worst level on Friday of R8.1253, Thursday's close of R8.0236, Wednesday's close of R7.9993, Tuesday's close of R7.9010 and Monday's close of R7.7983. It was bid at R10.4453 to the euro from R10.3823 before, and at R12.9974 against sterling from R12.9482 previously. The rand was last above R13 a pound on December 16 2011.

The euro was bid at US$1.2942 from Thursday's close of $1.2935, Wednesday's close of $1.2936 and Tuesday's close of $1.2992.

Dow Jones Newswires reported that the euro edged down on Friday and was likely to keep falling due to investors' renewed concerns over the possibilities of a disorderly Greek default or the country's exit from the eurozone due to political uncertainties.

“It's Greece. It's its politics,” said Takao Yahata, chief manager of currency trading at Mitsubishi UFJ Trust and Banking.

Athens' ruling coalition lost its majority in the May 6 election, and the market is paying attention to whether the nation will be forced to call another election as early as in June. The result of such an election, or avoiding one, could lead to a change in the nation's course to improve its fiscal status, a necessary condition to get aid from other eurozone countries and the International Monetary Fund.

Traders said the euro's losses so far were limited because some speculators were defending the currency options' barrier at $1.2900.

But with one more push, such as a negative headline from Greece, the euro was likely to resume sharper declines, Yahata said.

A massive trading bet boomeranged on JP Morgan Chase, leaving the bank with at least $2 billion in trading losses and its CEO, James Dimon, with a rare black eye following a long run as what some called the “King of Wall Street”. JP Morgan shares slid 8%, while US stock futures added to declines after US wholesale prices fall slightly more than expected in April.

Facebook's IPO received lower-than-expected demand from institutional investors amid concerns about growth prospects, although retail investor demand remained robust, while crude oil futures slid amid continued political turmoil in the eurozone and increased oil production in the Middle East.

Top US business executives began mobilising and plan to be more vocal in urging Congress to reach a bipartisan deficit-reduction deal by the end of the year. - I-Net Bridge


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