Rand slides on Euro nerves, poor growth

[miningmx.com] — SOUTH Africa’s rand fell as much as 1.7% against the dollar in nervous trade on Wednesday ahead of more European talks about Greece’s debt problems and amid concerns about weakening domestic growth.

Finance Minister Pravin Gordhan was due to speak in parliament before a media briefing where he might comment on reports that South Africa and other emerging markets are mulling buying European debt to support the struggling European currency.

The rand fell to 7.4250 to the greenback earlier in Wednesday’s session and was at 7.40 by 0655 GMT, down 1.38% from Tuesday’s close.

Reuters data showed the rand was the worst performer among a basket of 20 emerging market currencies. Traders said it was playing catch up after holding up relatively well as its peers fell sharply on risk aversion in recent months.

“We’ve gone through quite severe technical levels. We also maintained that range below 7.0/dollar for a long period of time when everyone else was moving a lot. We then broke through that level and that was quite a significant technical level,” Nedbank Head of Institutional Sales Brigid Taylor said.

A convincing break above 7.38 would open up the rand to its next technical support at 7.52.

Any confirmation that Brazil, Russia, India, China and South Africa – the BRICs grouping – may take steps to increase their holdings of euro-denominated bonds to help ease Europe’s debt crisis, could hurt the rand, Taylor said.

“It would be potentially a little bit negative purely because of the uncertainty regarding the euro zone,” she said. “In South Africa we need to keep our house in order before we worry about bailing out other weaker defaulting nations.”