The rand was firmer against the dollar in noon trade on Tuesday as it tracked a euro that had managed to trim earlier losses.
"The Swiss National Bank announced that it would buy an unlimited amount of forex in order to weaken its currency," a market analyst said.
"That rallied the euro and consequently the rand moved firmer against the dollar," he added.
At 11:33 local time, the rand was bid at 7.0732 to the dollar from its previous close of 7.1111. It was bid at 10.0545 to the euro from 10.0122 before, and at 11.3894 against sterling from 11.4456 previously.
The euro was at US$1.4215 from US$1.4063 before.
Meanwhile Dow Jones Newswires reported that the Swiss National Bank on Tuesday set a minimum exchange rate for the euro against the Swiss franc, in a bid to contain a rise in the franc that it says posed a threat to Switzerland's economy.
The central bank said it would no longer tolerate an exchange rate below CHF1.20 to the euro. "The SNB will enforce this minimum rate with the utmost determination and is prepared to buy foreign currency in unlimited quantities," it said in a statement.
The franc's overvaluation was an "acute threat to the Swiss economy and carries the risk of a deflationary development," the SNB said.
The Swiss franc weakened sharply against the euro and US dollar following the announcement. The euro soared to as high as CHF1.2180 before retreating slightly, while the greenback rose to CHF0.8579.
The move also pushed the single currency as high as US$1.4282, while the safe-haven yen fell sharply against the dollar.
In 1978, the SNB fought successfully to make the franc fall against the deutsche mark, which was slumping at the time, by selling francs for dollars. The franc fell 20% against the mark within three weeks.
"It took a couple of days to show that the SNB was serious about its unlimited intervention, but then the strategy worked fine," said Tobias Straumann, an economic historian and professor at the University of Zurich.
Foreign-exchange markets were much smaller then, and in pushing the franc lower against the mark, the SNB was only dealing with the currency of one country, rather than with the euro, representing half of Europe. I-NET BRIDGE
