Graphic: renjith krishnan

The rand remained weak but was off the session's worst level in late trade on Thursday as concerns continue to mount while European leaders struggle to come up with a solution to the Eurozone debt crisis.

The volatile rand was mainly tracking international markets, which slumped on news that Japan had been downgraded and on mounting concerns about the outcome of the EU meeting on the debt crisis, which deterred risk-taking.

On Tuesday Japan's long-term foreign and local currency issuer default ratings were downgraded to A+ with negative outlooks over concerns of high rising public debt ratios, by ratings agency Fitch. The long-term foreign IDR was downgraded from AA, while the local currency IDR was downgraded from AA-.

“The rand is weaker as a result of the negative global sentiment. Yesterday we had the news that Japan had been downgraded which impacted on the European markets and this has also hit emerging markets,” a local trader said.

“We are just waiting for news that will come out Europe. At the moment we are just following the euro, which has recovered a bit since this morning,” a local trader said.

At 15:31 local time the rand was bid at R8.3897 to the dollar from Tuesday's close of 8.3259. It hit an intraday worst level of 8.4188 in earlier trade.

It was bid at R10.6265 to the euro from Tuesday's close of R10.5386 and at R13.1891 against sterling from R13.1076 at Tuesday's close.

The euro was bid at US$1.2665 from Tuesday's close of $1.2677.

Dow Jones newswires reports that the euro sank to its lowest level against the dollar since August 2010 in European trading hours Wednesday as investors grew increasingly skeptical that European leaders meeting in Brussels would announce further measures to alleviate the euro zone crisis.

Investors piled into the relative safety of the dollar and Japanese yen and pushed German borrowing costs to record lows at an auction of two-year government bonds. European equities extended the losses seen in Asia while growth-sensitive currencies like the Australian dollar plumbed its lowest level since November 2011 at $0.9730.

Emerging market currencies also came under severe pressure in a sign of stress.

The downbeat tone followed a warning from Greece's former prime minister Lucas Papademos late Tuesday that the risk of the country leaving the euro zone was real.

Sentiment was further damaged as investors lowered their expectations ahead of a summit and informal dinner of European Union leaders. The euro sank to as low as $1.2615 before steadying.

“It seems unlikely that the heads of government are actually going to present any further proposals to stimulate growth,” Commerzbank said in a research note. “All we can do is to hope that the participants are going to enjoy their dinner.” - I-Net Bridge