Rand slips to R14.46/$ as dollar rebound continues
The rand is under pressure by a firmer dollar, while problems in Turkey and Italy are also providing cause for concern for the local currency
The rand had retreated against major global currencies by Wednesday afternoon, tracking a weaker euro, while events in Turkey and Italy added to negative sentiment towards the local currency.
The primary market focus remains on US-Canada trade talks that get under way in earnest this week, with the dollar finding support as market optimism over a recent US trade deal with Mexico faded.
The Turkish lira was also much weaker in early trade, following relative calm over the past week, while Italian politics has also begun to loom as a potential risk factor for the euro, which the rand often tracks.
According to reports, the Italian government is lobbying the European Central Bank (ECB) for it to continue quantitative easing, as bond yields rise in that country.
Italy has been searching for allies to support its bonds in recent weeks, with the US and China voicing concern about a recent widening in Italy’s bond yield spread over its eurozone peers, said Oanda vice-president of market analysis Dean Popplewell.
Analysts said the effects of Italian politics seemed confined to that country for now, but risked spilling over into euro weakness.
There were no real local factors affecting the currency on Wednesday, but traders are looking towards producer inflation data on Thursday.
At 3pm, the rand was at R14.4619 to the dollar, from R14.2300. It was at R16.8698 to the euro from R16.6407 and at R18.6172 to the pound from R18.3102.
South African bonds were weaker too, with the yield on the benchmark R186 rising to 8.95%, from 8.865%, while the R207 was at 7.605% from 7.525%.