The rand was softer against the dollar in early morning trade on Monday as it tracked a euro that had been hit by Moody's downgrading of Greece and as risk aversion set in.
"I put the rand in a range of 6.78 to 6.88 for now," a local rand trader said.
At 8.32am local time, the rand was bid at R6.8324/$ from its previous close of R6.7706/$. It was bid at R9.8051/€ from R9.7211/€ before, and at R11.1228/£ from R11.0319/£ previously. The euro was at $1.4366 from $1.4386.
Standard Bank said in a morning note that the rand had started the week on the back foot.
"Renewed risk aversion, illustrated by the latest rally of safe-haven assets such as gold, coupled with the lack of extended euro strength, are the catalysts for this weaker rand bias. A return to 6.83 rand is on the cards and, if breached to the upside, 6.90 rand would come into play."
The rand was still taking its cue from international sentiment.
"Therefore, all eyes this week will be on how US policymakers decide to increase the US's debt ceiling (before the August 2 deadline) to avoid a debt default and credit rating downgrade in August.
"Should these new debt policies bring about more risk aversion, the rand could again fall victim to a renewed flight to safe-haven assets, which, ironically, is likely to benefit the dollar."
Meanwhile, Dow Jones Newswires reported that Asian currency markets had taken the US debt impasse largely in stride on Monday, but the euro had slipped late in the session when Greece was downgraded to near-default status.
Democrats and Republicans missed a deadline they had set for themselves for a deal to raise the debt ceiling - and avoid default - in time for Asian markets to open. But while the dollar weakened, traders seemed if anything bored with the exercise: data from EBS indicated activity among major currencies was barely half their average levels of the past 30 sessions.
Asian currency markets still expected "that something will get cobbled together", said Adrian McGowan, head of Asia-Pacific trading at Barclays Capital in Singapore.
But late in the session, Moody's slashed Greece by three notches to "Ca", a cut above default, on expectations that the latest bailout will force "substantial economic losses" on private creditors.
In Washington, there was no sign of agreement, with senior players in both parties now formulating their own debt plans.
For the Democrats, Senate majority leader Harry Reid said he was working on a back-up plan to increase the debt ceiling by $2.7 trillion, enough to last through next year's election; an aide said the plan would not include tax hikes. Leading the Republican effort, House speaker John Boehner was pressing ahead with a phased plan to cut the deficit by $1.2 trillion over 10 years and raise the debt ceiling only through the end of this year.
The Treasury Department said the US would default on some obligations if Congress did not raise the debt ceiling by August 2, although some analysts estimated the government would not run out of money until August 8 or even August 22.
But Standard & Poor's warned that even if Washington staved off a default, it might downgrade the US from "AAA" if there was no credible longer-term deficit-reduction plan.
