January 25, 2012 / 10:49 AM / in 6 years

S.Africa's rand hits 1-week low, euro zone weighs

JOHANNESBURG (Reuters) - South Africa’s rand weakened against the dollar on Tuesday as investors turned their backs on risky assets due to uncertainty about the outcome of talks aimed at averting a chaotic Greek debt default.

A new five rand coin is displayed by a South African Reserve Bank worker during its launch at the South African Mint July 27, 2004.

The rand fell as much as 1.1 percent in the session to hit a session low of 8.0125, its weakest since last week.

Rand weakness weighed on bonds, trimming gains that came after a strong debt auction earlier.

The rand broke support at 8.00 and was last trading at 7.98 to the dollar, from Monday’s New York close of 7.9250.

In the absence of key local news, the rand has been taking direction mainly from international developments that are dominated by concerns over Greece’s failure to reach a debt restructuring deal with its creditors.

“We’ve seen some stop losses on the rand and the market got a bit short. The euro and equities haven’t performed so everything has been against the rand today,” said David Gracey, a trader at Investec, seeing the rand at 8.05 in the next few days.

The rand weakened by 22 percent last year against the dollar in 2011 as the euro zone debt crisis deepened.

While it has recovered from 2-1/2 year lows of 8.61 hit in November it has not quite shaken off the bearish tone and is struggling to sustain levels below key support at 8.00/dollar.

On fixed income, bonds reversed some gains as the rand weakened.

The yield on the 2015 bond fell two basis points to 6.65 percent, off a session low of 6.615 percent. The 2026 yield was down 1.5 basis points to 8.315 percent from 8.275 percent earlier.

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