Graphic: renjith krishnan

The rand was still trading in very quiet territory on Monday afternoon‚ weakening a bit in line with a softer euro.

“The end-June half-year is coming up when a lot of local companies will be squaring off their books‚ and rand calmness is therefore expected‚” a local trader said.

Investors were also waiting for fresh cues from the upcoming European Union summit on Thursday and Friday‚ when Greece is expected to request an easing of its bail-out terms.

At 15:35 the rand was bid at R8.4759 to the dollar from its previous close of R8.4113. It was bid at R10.5888 to the euro from its previous close of R10.5444 and at R13.1834 against sterling from R13.1068 before. The euro was bid at US$1.2489 from its previous close of $1.2541.

Dow Jones newswire reported that the Spanish government on Monday formally requested EU aid to help finance the clean-up of its ailing banking industry‚ a step Prime Minister Mariano Rajoy said showed Spain’s commitment to “re-establishing confidence in Europe’s single currency”.

Spain struck an agreement with the 16 other euro-area members to ask for up to EUR100bn from EU bail-out facilities earlier this month. The government on Monday did not specify exactly how much it would ask for‚ nor did it provide any new details on the conditions that were likely to be attached to the aid‚ according to a copy of the request sent on Monday by the finance ministry‚ but it said it hoped to finalise an agreement on the terms by July 9.

Earlier on Monday Dow Jones reported that the euro‚ emerging-market currencies and other risk-sensitive assets were under pressure as investors grew increasingly doubtful that the EU summit would provide any progress in stemming the region’s debt crisis.

Also under pressure were peripheral eurozone bonds‚ with the 10-year Spanish government bond yield up 15.5 basis points at 6.44%‚ while the corresponding Italian yield was recently up 11.5 basis points at 5.85%.

Dow Jones said it was the same old story for markets in Europe‚ which raised the question — why was there positive feeling about the summit on Friday‚ especially after leaders of the region's four largest countries did little to address the problem at their own meeting?

Other currency news included India unveiling measures to stem a recent sell-off in the rupee‚ but the moves failed to boost sentiment about India or its currency.

The rupee had been gaining earlier in the session in anticipation of steps the Reserve Bank of India might take to allow foreign investors to put more money in local currency-denominated bonds. But when the bank did raise the cap on investments in bonds by overseas funds‚ it was not by as much as the market had hoped.

The bond measure was just one of a couple moves to get more foreign investment into the country and stop the capital flow out of India but the initial market reaction was the same as it has been for weeks: sell the rupee.

Also under pressure was the Turkish lira after Turkey said Syria shot down one of its military aircraft late Friday‚ and it would determine how to respond once details of the incident were confirmed. Even so‚ the declines for the lira were in line with other similarly trading currencies‚ like the rand‚ and were not yet a signal of a Middle East currency sell-off.

Meanwhile‚ in the wake of a rapid impeachment and removal of Paraguay’s leftist president‚ attention shifted to the reaction of other South American countries. Leaders of neighbouring countries roundly denounced the move as a legislative coup‚ though each lacked the means to bring the ousted president back. The ouster had not immediately hit currencies in the region‚ but there was a risk it could hit South American trading at the least. - I-Net Bridge