BD: Rand extends weakness against dollar on Greek exit fears
THE rand extended its losses against the dollar in late afternoon trade on Wednesday as the greenback continued to advance against the euro.
Analysts said the local currency looks fragile as a Greek debt repayment default and a possible exit from the EU looms on the horizon. The dollar was supported by the prospect of interest rate hikes in the US this year as well as higher GDP growth in that country.
At 3.30pm the rand was at R12.1464 against the dollar from Tuesday’s close of R12.0781.
The rand was at R13.1580 against the euro from a previous R13.1343 and was at R18.6308 against the British pound from a previous close of R18.5740.
The euro was at $1.0833 from a previous close of $1.0875.
Global risk aversion and the weak local GDP figures released on Tuesday mean that the continuing euro losses against the dollar are spilling into rand/dollar trading, Rand Merchant Bank (RMB) said in a note.
The domestic unit has been under pressure during the past four sessions, partly due to renewed interest in the dollar, which analysts have attributed to the latest batch of upbeat US data.
These data increase the likelihood of a hike in interest rates later in the year. Lingering fears of Greece defaulting on its financial obligations have also dented sentiment.
Cash-strapped Athens has to repay an estimated EUR1.6bn to the International Monetary Fund next month, the first instalment of which falls due on June 5.
