The rand moved off its worst levels in midday trade on Friday, pulling back to its opening levels, tracking the euro as details from the European summit continued to unfold.
At 11:42 local time, the rand was bid at R8.2279/$ from its previous close of R8.2202/$. It was bid at R10.9713/€ from R10.9764/€ before, and at R12.8484/£ from R12.8538/£ previously.
The euro was bid at $1.3333 from its previous close of $1.3346.
A local dealer noted a recovery in the local unit from its previous worst level of 8.32 against the buck, driven by exporters. "We will wait to see what happens throughout the course of the day in the eurozone," she said.
Standard Bank analysts confirmed in a morning report that the rand had pulled back after the ECB disappointed.
"While the ECB delivered a 25 basis point rate cut yesterday, as expected, while also pledging to ease borrowing for banks, it did not offer additional support for euro bonds.
"With eurozone solvency being top of mind, the bank's focus on easing lending strains seemed to hit the wrong chord."
Standard Bank said the rand pulled back sharply after the announcement, having already spent the day on the back foot due to a flow of negative domestic production and current account data.
"Though much of the rand's direction will depend on the EU summit that continues today, expectations are high that this summit will deliver more concrete results than previous attempts - the rand is still on the back foot this morning." Standard Bank added that Asian markets were in the red, and commodity prices were softer.
"This spells risk-off sentiment, and likely continued rand weakness, pending the summit's outcome."
Meanwhile, Dow Jones Newswires reported that emerging market currencies were tracking EU summit developments, following Thursday's disappointing ECB meeting which triggered a sharp sell-off in risky assets. "CEEMEA (Central Eastern Europe Middle East & Africa) was badly hit with currencies 1%-2% weaker whilst local bond markets turning sharply weaker," said UniCredit. So far in Friday's session, CEE currencies had tracked EUR/US$ developments, opening weaker before staging a mild recovery. "Today focus remains on EU."
