Rand weaker on EU summit concerns

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The rand was weaker in midday trade on Wednesday on mounting concerns about the outcome of the European Union leaders summit on the eurozone debt crisis.

“We are back into the 'risk-off' mode, so emerging market currencies are being hammered again,” a local trader said.

At noon local time the rand was bid at R8.4119 to the dollar from Tuesday's close of 8.3259.

It was bid at R10.6274 to the euro from Tuesday's close of R10.5386 and at R13.2123 against sterling from R13.1076 at Tuesday's close.

The euro was bid at US$1.2636 from Tuesday's close of $1.2677.

Dow Jones Newswires reported that the euro sank on Wednesday to its weakest level against the dollar since August 2010, while it was also under pressure against other major currencies as traders' nerves were frayed by concerns that Greece could leave the common currency.

French Prime Minister Jean-Marc Ayrault on Wednesday said a Greek exit from the euro would be a catastrophe and Europe must help Greece to recover from its deep crisis and recession.

The European Central Bank (ECB) has set up a working group on Greece to prepare for a possible escalation of the country's debt crisis, German newspaper Die Zeit reported on Wednesday.

Germany underscored its objection to the idea of launching eurozone bonds ahead of a summit of European Union leaders later on Wednesday, with Finance Minister Wolfgang Schaeuble saying such jointly issued bonds would be the wrong approach to solving Europe's sovereign debt crisis.

UK retail sales posted the biggest decline in more than two years in April, highlighting the impact on consumer demand from the recession and persistent high unemployment, data from the Office for National Statistics showed on Wednesday.

Several members of the Bank of England's Monetary Policy Committee came close to voting for an expansion of its bond-buying stimulus programme at their May meeting, according to minutes released on Wednesday.

Italian consumer confidence tumbled much more than expected in May to its lowest level since 1996 as residents in the eurozone's third-largest economy grew less confident about the general economic situation, national statistics institute Istat reported on Wednesday. - I-Net Bridge


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