S.Africa's rand stabilises, Greece poses risk

by Reuters 0

South Africa’s rand was off the previous day’s two-week lows against the dollar in early Tuesday trade, helped by short-covering from oversold levels but still remained vulnerable to a weak domestic growth outlook and Greece’s debt woes.

The rand barely moved on central bank data showing that South Africa’s private sector credit demand increased by 9.53 per cent year-on-year in May compared with 9.35 per cent in April, central bank data.

At 0722 GMT, the rand was at 12.2450 to the greenback, barely changed from Monday’s close at 12.2475.

The local unit had fallen one per cent to 12.4100 on Monday, its weakest since June 17, as the threat of a debt default by Greece sapped market appetite for risky assets.

“The rand looks likely to stabilise as the panic over Greece recedes, although the ongoing swings in euro/dollar creates some risks,” Rand Merchant Bank currency analyst John Cairns said.

On the local front, a wider-than-expected trade deficit could also add pressure on the local currency, traders said.

The revenue service was due to release the data at 1200 GMT.

Government bonds edged up slightly after Monday’s heavy losses, with the yield for the paper maturing in 2026 dipping half a basis point to 8.345 per cent.