The South African rand weakened to its worst level since October 15 last year in afternoon trade on Friday on the back of a break in the euro below $1,26. Market analysts expected the local unit to continue to lose ground going into the new week.
The rand weakened to R6,5581 as the euro — which the local currency tends to track as the currency of South Africa’s biggest trading partner — came under pressure on, among other factors, news that French gross domestic product rose by 0,2% in the first quarter, slower than the 0,5% expected by economists.
According to AFX, euro weakness was exacerbated by growing perception that French voters are leaning toward voting against the European Union Constitution in an upcoming referendum, a development that would undermine the political solidarity underpinning the currency, according to Mike Malpede, senior currency analyst at Refco.
At 5.15pm, the euro being quoted at $1,2543, while the rand was being quoted at R6,5401 to the dollar.
The euro’s weakness, along with other events affecting some of the major currencies, helped the dollar to make some advances.
Other foreign events lifting the dollar included a weak consumer price report from Canada.
In addition, Canadian Prime Minister Paul Martin managed to survive a confidence vote, but only by a one-vote margin, a development that could undermined political stability in Canada, the analyst said.
AFX reports that with a dearth of United States economic reports on Friday, currency markets are expected to track speeches by Federal Reserve officials, particularly a lunchtime address by Fed chief Alan Greenspan. He is expected to discuss energy. — I-Net Bridge