Graphic: renjith krishnan

The rand traded in a very narrow range today with a slight recovery seen during late trade on Tuesday‚ with investors awaiting news from the EU summit on Thursday and Friday this week and local traders focussing on the ANC policy conference that started today.

“The rand was trading in a narrow range of between 8.42 and 8.48 today with a weaker bias. We are expecting R8.60 in the near future‚” said Brigid Taylor‚ head of flow sales at Nedbank.

At 15:30 the rand was bid at R8.4516 to the dollar from its previous close of R8.4661. It was bid at R10.5452 to the euro from its previous close of R10.5833 and at R13.1804 against sterling from R13.1879 before. The euro was bid at US$1.2478 from its previous close of $1.2501.

Meanwhile soaring borrowing costs in Spain sent the euro sharply lower against the dollar and the pound‚ although the single currency managed to regain its composure and pared losses in later European trading on Tuesday.

Dow Jones Newswires earlier reported that the euro traded at its lowest level in June against the pound‚ sinking below GBP0.8000 and as low as GBP0.7992 after Spain auctioned EUR3.077 billion (US$3.850bn) of three-month and six-month treasury bills. While the amount sold was in the upper end of the targeted range‚ the yields paid by Spain were the highest so far in 2012.

“Spain is facing an uphill struggle in trying to attract external funding‚” said Valentin Marinov‚ a currency strategist at Citigroup in London. “The auction is yet another signal from the market to eurozone officials that more needs to be done and quickly‚ that a response has to come at the European Union leaders’ summit later this week.”

The surge in yields came after Moody’s Investors Service downgraded 28 Spanish banks late on Monday‚ after Spain officially requested bailout funds from the EU.

Elsewhere in the eurozone Cyprus on Monday asked for assistance‚ lifting the number of eurozone countries with aid-needs to five.

The day’s big winner was sterling‚ which received a sizable boost after Bank of England Governor Mervyn King poured cold water on expectations for further monetary easing in the UK at his testimony before the Treasury Select Committee. - I-Net Bridge