By Agency Reporter

Friday, 4 Feb 2011

South Africa’s rand may weaken against the dollar after anti-government protests in Egypt turned violent, damping risk appetite and boosting the United States currency as a safe haven, according to Standard Bank Group Limited.

“The political unrest in Egypt is causing great uncertainty in the markets,” a Johannesburg- based currency strategist at Standard Bank, Michael Keenan, wrote in a note to clients on Thursday. He added, “We see an increased chance of broad-based risk aversion. This is why we still believe that the risk lies in extended rand weakness.”

According to a Bloomberg’s report, he said investors should take advantage of any gains in the rand to purchase the dollar, which has appreciated on its “safe-haven appeal”.

The rand lost 0.2 per cent to 7.1817 per dollar as at 1:55pm in Johannesburg, and was little changed versus the euro at 9.8835. The South African currency has lost 1.5 per cent versus the dollar since protests started in Cairo on January 25 and 7.7 per cent so far this year.

South African government bonds fell for a second day, with the benchmark 13.5 per cent security due by September 2015 losing 15 cents to 121.43 rand. The yield climbed three basis points, or 0.03 percentage point, to 7.86 per cent.

Gunfire erupted in Cairo’s Tahrir Square early on Thursday as supporters of Egyptian President Hosni Mubarak clashed with demonstrators demanding an immediate end to his 30-year rule. Protests also spread to Yemen where opposition groups, inspired by uprisings in Tunisia and Egypt, are pressuring President Ali Abdullah Saleh to step down before his term ends in 2013.

Source: Punch