The rand remained firmer against the dollar in late afternoon trade on Monday. It tracked a euro that had been buoyed by positive sentiment that a second Greek bailout would be approved later in the day.
“The rand has done pretty well today, outperforming most of its peers,” a local analyst said.
“The local currency benefited strongly from news on the weekend that China would cut its reserve requirements for banks and also from the general improvement in risk appetite ahead of the meeting of the eurozone finance ministers later today,” he added.
The analyst said it was “very likely” that the finance ministers would approve Greece's second bailout - “but not certain”.
At 15:34 local time, the rand was bid at R7.6652 to the dollar from its previous close of R7.6834. It was bid at R10.1642 to the euro from R10.1728 before, and at R12.1528 against sterling from R12.2227 previously.
The euro was bid at US$1.3265 from its previous close of US$1.3223.
Meanwhile Dow Jones Newswires reported that a nervy but buoyant tone prevailed in European trading hours on Monday with the euro moving higher against the dollar after Germany's central bank provided an upbeat assessment on the outlook for its economy, and expectations rose that eurozone finance ministers would agree on a second bailout for Greece later in Brussels.
The 17-country currency rose to a fresh one-week high against the buck after the Deutsche Bundesbank wrote in its monthly bulletin for February that the outlook for the German economy had “perceptibly” improved. That, together with expectations Greece would receive a new 130 billion euros loan deal later Monday, boosted investor sentiment across markets with European stocks moving higher and yields on Italian 10-year government bonds falling to their lowest level since October.
The People's Bank of China's move on Saturday to cut banks' reserve-requirement ratio by 0.5 percentage points, effective February 24, also supported confidence in a global growth rebound.
But it wasn't all positive, as details on the Greek deal were still lacking, and the International Monetary Fund said it was likely to offer minimal funds for the second Greek aid package. Greece, and other eurozone nations, also still had a long way to go before returning to growth.
“Most people realize Greece's problems are far from over and yes a default may be avoided next month but we will continue to hear bad news from Greece and potentially from other countries in the eurozone over the next few months,” said Jane Foley, a currency strategist at Rabobank in London. - I-Net Bridge
