The rand was firmer against the dollar in early morning trade on Monday, as hopes abounded that a decision would be taken to stem the eurozone sovereign debt crisis by Wednesday, following a weekend summit.
“The rand - and the euro - are looking a lot better,” a local currency traded said.
“The weakness we saw last week seems to have been nullified for the time being,” he added.
The trader put the dollar/rand in a range of 7.90 to 8.00 for the first part of the session.
At 08:25 local time, the rand was trading at 7.9231 to the dollar from its previous close of 8.0573. It was trading at 11.0472 to the euro from 11.1400 before, and at 12.6612 against sterling from 12.7777 previously.
The euro was at US$1.3949 from US$1.3845 before.
Standard Bank currency strategists said in a morning note that the rand, however, was still vulnerable to sentiment as market waited details of Sunday's EU summit.
“The technical details of this weekend's much anticipated European debt summit, such as whether the EFSF bail-out fund would be increased, will only be made known on Wednesday.
“However, preliminary reports suggest that ECB assistance will be limited, while the respective debt-laden governments as well as the IMF and BRIC country involvement could move up a gear.
“It also seems as if Greek bond-holders should brace themselves for a haircut because there is little support for restructuring Greece's debt at this stage.”
Meanwhile Dow Jones Newswires reported that the dollar was little changed against the yen on Monday in Asia as heightened caution over possible market intervention by Japan kept investors away from active trading.
The focus in early Asian trading hours was on whether Japan's finance ministry would stage yen-selling intervention after the greenback recorded a fresh all-time low of Y75.78 on Friday.
Japan's Finance Minister Jun Azumi did little to dissuade such speculation, saying earlier Monday that Tokyo would take “decisive” steps against the strong yen if necessary.
As of 06:50 SA time, however, no intervention by Japanese authorities had been seen, and currency markets in Tokyo remained largely quiet. The greenback was at Y76.22, with its trading range so far Monday between Y76.15 and Y76.60, from Y76.19 on Friday in New York.
With the morning session passing quietly and share markets buoyant, many dealers thought the chances of market intervention were receding.
“I don't see any big risk of Japanese intervention now, especially because global share prices are rising,” said Kosuke Hanao, a senior dealer at HSBC Tokyo.
At 07:04 SA time, Japan's Nikkei Stock Average was up 1.6% at 8818.35.
Turning to the euro, dealers said the focus in the near term was Wednesday's meeting of European leaders on the continent's sovereign debt problems, as investors awaited any further developments on possible solutions to the crisis.
Barclays Capital's chief currency strategist Masafumi Yamamoto said the euro might fall if the outcome of the meeting failed to go beyond traders' expectations. - I-Net Bridge
