The Rand under the control of Greece? - 6th May 2010

The rand continued to be under pressure in early trade Thursday, after it weakened almost 1.4% on Wednesday, as the Greek crisis continues to cast a pall over global markets.

At 09:17 the rand was bid at R7.6530 to the dollar from R7.6159 at its previous close. It was bid at R9.7663 to the euro from its previous close of R9.7714 and was at R11.4952 against the sterling from R11.5049.

The euro was bid at $1.2762 from $1.2812 previously.

For today all eyes will be on the euro once again.

RMB analysts said in their morning report that EUR/USD is vulnerable to further weakness ahead of the ECB's monthly press conference later this afternoon, posing additional upside risk to the rand.

"Investors are yearning for stability amid political wrangling in Germany and civil dissent in Greece. A change in President Trichet's rhetoric could provide a necessary fillip to the market. Uncertainty, however, lingers as the ECB remains wary of financial market intervention given that it may compromise the central bank's independence. Yet the ongoing crisis may force the ECB to shore up the embattled eurozone nation and quell rising fears of contagion.

"Any indications of an outright purchase of government debt or the resumption of special liquidity operations, adopted at the height of the financial crisis, should provide welcome cheer to lacklustre global equity and bond markets and perhaps stem the recent the purchase of safe haven assets," they said.

For now, the rand and global markets in general remain at the mercy of European policymakers and EUR/USD.