Rand weakens on EU summit jitters

Johannesburg - South Africa's rand weakened against the dollar on Thursday as traders moved out of assets seen as risky, such as emerging market currencies, ahead of a European Union summit later in the day.

The rand was 0.37 percent weaker at 8.6311 against the dollar at 15h13 GMT from Wednesday night's close of 8.6020 in New York.

This week's “rand rally was overdone. Basically we have got the EU summit over the next two days, which is the uncertainty,” said Brigid Taylor, head of institutional sales at Nedbank.

EU leaders were due to meet on Thursday, to try to bridge deep differences over plans for a banking union. It will be the fourth time they have met this year and the 22nd summit held since the crisis erupted in Greece in late 2009.

From a local perspective, months of wildcat strikes are becoming less of a factor for traders as they switch focus to other global issues. But several mines still cannot haul ore out of the ground due to the strikes that have hit the platinum and gold sectors hard.

Gold Fields said most miners returned to work at its strike-hit South African operations on Thursday but a new walkout at Lonmin's Marikana platinum mine dampened hopes of an end to the labour unrest.

“There are still some skeletons in the closet that will have to be resolved,” Taylor added.

On fixed incomes, the yield curve flattened with shorter-dated bonds weakening and the longer-end gaining strength.

The three year bond rose four basis points to 5.4 percent while the longer dated fell 2.5 basis points to 7.585 percent. - Reuters