Bloomberg News

Rand Reverses Decline to Dollar Amid Greece Debt Optimism

June 27, 2011

June 27 (Bloomberg) -- The rand snapped three days of losses and erased an earlier decline to the lowest level this month against the dollar amid optimism Greece’s parliament will approve budget cuts to avert a debt default.

South Africa’s currency strengthened as much as 0.6 percent to 6.8628 per dollar and traded 0.4 percent stronger at 6.8705 as of 5:06 p.m. in Johannesburg. It declined 0.3 percent to 9.8159 per euro.

The euro snapped a three-day slump versus the yen and dollar as Vittorio Grilli, head of the European Union’s Economic and Finance Committee, met representatives of some of the world’s biggest banks to discuss how private investors can participate in a new rescue. The rand often tracks the euro, which accounts for 45 percent of South Africa’s exports and 34 percent of its imports.

“The intraday and intraweek focus will remain firmly on Greece for short-term direction,” Tradition Analytics researchers led by Johannesburg-based Quinten Bertenshaw said in a research note. “At the moment, the odds are still stacked in favor of the Greek parliament being able to push through their austerity measures.”

European Union leaders vowed to stave off a Greek default as long as Prime Minister George Papandreou pushes through a 78 billion-euro ($111 billion) austerity package. European finance chiefs will decide on July 3 whether Greece has met conditions for its next aid payment. The first session of the Greek parliament’s three-day debate on the austerity measures is scheduled to begin today, with a vote expected on June 29.

Bonds gained. The 13.5 percent note due 2015 rose 25 cents to 121.59 rand, driving the yield down seven basis points, or 0.07 percentage points, to 7.42 percent.

--Editors: Ana Monteiro, Peter Branton

To contact the reporter on this story: Robert Brand in Cape Town at rbrand9@bloomberg.net

To contact the editors responsible for this story: Gavin Serkin at gserkin@bloomberg.net


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