Rand flat against the US dollar

The rand was flat against the dollar in noon trade as it tracked a euro that had been flustered by reports that Greece might still need a third bailout.

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The rand was flat against the dollar in noon trade on Tuesday as it tracked a euro that had been flustered by reports that Greece might still need a third bailout.

“The euphoria is wearing off as the Greek deal was already priced into the markets,” a local currency trader said.

“The markets are still worried about Greece and certain news reports haven't helped,” he added.

“I see a weaker euro looming and therefore a weaker rand as markets haven't been wowed by the approval of the second Greek bailout,” the trader said.

At 11:37 local time, the rand was bid at R7.6962 to the dollar from its previous close of R7.6805. It was bid at R10.1994 to the euro from R10.1480 before, and at R12.1913 against sterling from R12.1587 previously.

The euro was bid at US$1.3259 from its previous close of US$1.3209.

RMB said in a note on Tuesday morning that the market had responded towards the Greek bailout agreement with a big yawn.

“After weeks of anxiously waiting, the deal is an anti-climax. Part of the reason is that some eurozone members do not believe a second bailout will resolve Greece's problems.

“Particularly damning has been a strictly confidential report prepared for eurozone members, obtained by the Financial Times, suggesting another bailout will be needed. Surprise, surprise, the bailout simply means that Greece lives to die another day.”

Meanwhile Dow Jones Newswires reported that although the euro was still up against the dollar in European markets, trading had been cautious.

Commerzbank said scepticism was justified and added that even with the Greek bailout, the majority of market players were finding it hard to believe that Greece would get through to 2020 without a further default.

Many investors were concerned that the Greek general election, expected in April, might bring in a government unwilling or unable to implement stringent austerity measures.

In addition to this, the UK's Financial Times reported that Greece might still need a third bailout as the forced austerity could cause debt levels to rise, and its debt restructure could prevent Greece from ever returning to financial markets.

“The crisis marathon is not over,” warned Carsten Brzeski, economist at ING Bank NV. “The combination of more austerity, social unrest and European impatience could become explosive, with a high risk that the Greek crisis could still derail.”

Brzeski added that the second bailout package had again bought time for other “peripheral” eurozone countries to show that they were different from Greece and to put all available “anti-contagion firewalls” into place. - I-Net Bridge

Source: http://www.iol.co.za/rand-flat-against-the-us-dollar-1.1239240

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