June 10 (Bloomberg) -- The rand declined for a third day against the dollar, heading for biggest weekly drop in four, as concern a resolution to Europe’s sovereign-debt crisis will be delayed prompted investors to sell riskier assets.
The currency of Africa’s biggest economy weakened as much as 0.8 percent to 6.7867 per dollar, and traded at 6.7754 at 3:15 p.m. in Johannesburg, bringing its retreat against the greenback to 0.9 percent. It depreciated less than 0.1 percent to 9.7910 per euro.
The euro fell against the dollar and was weaker versus 10 of its 16 major peers after European Central Bank President Jean-Claude Trichet rejected any direct participation in a second bailout for Greece. The rand often tracks the euro, the currency of most of South Africa’s trade, with a statistical correlation of 0.812 over the past month. A value of 1 would mean they moved in lock step.
“The modest recovery in the dollar and gradually rising risk aversion still tilts the scales in favor of a tactical long dollar position to test levels back towards 6.80/85,” Tradition Analytics researchers led by Johannesburg-based Quinten Bertenshaw said in a research note.
The euro extended its decline against the dollar, heading for the first weekly drop in a month, as Trichet signaled a slowing pace of interest-rate increases this year.
“The euro’s multi-week upside momentum has been broken by ECB President Trichet, thus taking away any impetus” for the rand to strengthen, John Cairns and Nema Ramkhelawan, currency strategists at Rand Merchant Bank in Johannesburg, said in a research note.
Bonds declined. The 13.5 percent notes due 2015 dropped 15 cents to 121.60 rand, driving the yield up three basis points, or 0.03 percentage point, to 7.46 percent. The 6.75 percent securities due 2021 slipped 39 cents to 89.80 rand, boosting the yield six basis points to 8.26 percent.
--Editors: Ana Monteiro, Linda Shen
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