Despite an easing of monetary policy in China, efforts to form a coalition government in Greece failed, giving rise to fears that it could default or even leave the eurozone.
“It means the Greeks will have to hold another election next month to decide whether or not the country will accept the austerity measures needed to receive further financial assistance and, ultimately, for Greece to remain in the eurozone,” said Absa Capital’s economics and strategy team.
The rand, known to be affected directly by global developments, firmed slightly on Wednesday in response to the news that the European Central Bank would support Greece for the next six months, reported I-Net Bridge.
Markets on edge
However, according to Standard Bank, continued concerns over the country’s possible exit from the eurozone are expected to keep the markets on edge and the rand under pressure.
Absa Capital also stated that, as long as there was lingering uncertainty about the European Union debt crisis and the global growth outlook, the rand was likely to remain under pressure.
During Tuesday trade, jittery market participants continued to flee to safe havens such as United States treasuries, the Japanese yen and the US dollar “and the rand also continued to weaken against the euro [on Tuesday] to 10.66, even though the losses were contained to a degree”, Absa said.
“Commodity prices, including gold, are falling due to the stronger US dollar environment, which means that die-hard ZAR bulls can’t even latch on to bullion’s traditional safe-haven status at the moment.”
Positive retail sales figures were released on Wednesday, however. South Africa’s retail sales rose by 6.8% year on year in March compared with 6.7% in February, Statistics South Africa reported.