Money SA economy
The rand lost its firm footing by midday amid rumours of a threat of a debt default by Dubai World.
Government-owned investment company Dubai World, which has almost $60 billion worth of liabilities, asked creditors to postpone its forthcoming payments for 6 months. The Dubai government yesterday moved to take direct control of Dubai World, saying it will ask for a delay in repaying its debts as it seeks to reorganise one of the emirate’s largest and most important conglomerates.
At 12.01pm the rand was bid at R7.42 to the dollar from R7.32 at its previous close. It was bid at R11.19 to the euro and R12.27 to the pound. The euro was bid at $1.50777 from $1.5135 overnight.
A local trader said: "The pound is taking a hammering on the Dubai story. While nobody is quite sure what it means at the moment, there are stories coming out of Europe that it may leave UK banks exposed.
"If that is the case, then obviously investors will get nervous and take risk off the table, which then translates into a weaker rand. We have a target of R7.53/$," the trader said.
Dow Jones Newswires said that the threat of a debt default by Dubai left investor appetite for risk on the wane and the US dollar recovering some of its recent sharp losses.
