The rand lost ground at noon on Tuesday due to continued financial uncertainty in Europe.
“The rand is suffering more than other currencies due to the financial uncertainty in Europe. Until there is more certainty out of Europe‚ it will continue to suffer‚” said Tim Bryson‚ currency trader at Rand Merchant Bank.
At 11:56 the rand was bid at R8.5021 to the dollar from its previous close of R8.4516. It was bid at R10.2876 to the euro from its previous close of R10.2429 and at R13.1778 against sterling from R13.1092 before. The euro was bid at US$1.2097 from its previous close of $1.2120.
Meanwhile positive manufacturing data from China‚ which is good for SA commodity export prospects‚ was offset by eurozone worries‚ especially after ratings agency Moody's yesterday changed its outlook on Germany to negative from stable.
Germany’s private sector activity slumped to more than a three-year low in July‚ while eurozone PMI survey data for July was unchanged at 46.4.
The main market driver out of Europe today will be economic headlines coming from the Troika’s trip to Greece. Troika inspectors from the European Commission‚ the IMF and the European Central Bank were due to review Greece's fiscal adjustment programme.
“A fresh wave of concerns about Greece could bring about increased risk aversion and‚ in turn‚ cause the rand to weaken further. This morning’s Chinese PMI data showed an improvement on the month‚ but the fact that the reading was still below the critical 50 mark — implying that the country’s manufacturing sector is still contracting — could curb any substantial relief rally of risky assets‚” said Absa Capital.
The score came out at 49.5 in July‚ compared with a final reading of 48.2 in June. Although the figure still indicated a contraction in manufacturing activity‚ it was significantly higher than in the previous month. - I-Net Bridge