THE rand maintained a firm footing in the afternoon session yesterday tracking a steady euro.
A local trader noted, however, that markets remain sensitive to Greece’s debt issues.
At 3.30pm the rand was bid at R7,3516 to the dollar from R7,4091 at its previous close. It was bid at R9,7149 to the euro from its previous close of R9,8043 and was at R11,1971 against the sterling from R11,2733.
The euro was bid at 1,3228 from 1,3211 previously.
A local trader said: “The rand is tracking a slightly stronger euro. The local currency is finding support at R7,32 to R7,33 against the dollar, but all eyes are still on the euro and Greece.
“The range is R7,32 to R7,42 against the dollar as markets remains sensitive to news on Greece and a potential bailout,” he said.
Dow Jones Newswires reported that the euro managed a modest rebound against the dollar yesterday as investors looked toward a possible resolution of talks on bailing out cash-strapped Greece. I-Net Bridge
, with strong euro zone economic data also boosting investor sentiment toward riskier assets.
Brazil's increase in a key interest rate to keep its growing economy from overheating also improved investor mood, as it lent support to an entrenching global economic recovery.
"The appearance of systemic stress in debt and currency markets Wednesday appears to have added some new urgency to efforts to deliver support for Greece," said Credit Suisse analysts in a note to clients. Euro zone officials have said they expect a final bailout plan within days, helping the euro further recover from the 12-month lows it hit Wednesday.
Thursday morning, the euro was at 1.3265 from 1.3203 late Wednesday, according to EBS via CQG.
European Union Commissioner for Economic and Monetary Affairs Olli Rehn said Thursday he is confident talks over a package of loans to help Greece unravel its spiralling debts will be completed in coming days.
The package will be a "multi-annual program that will lead to a major fiscal and also structural adjustment," he said in a short statement.
Discussions on Greece inching toward a conclusion combined with better- than-expected employment data in Germany and a strong reading for euro-zone economic sentiment to lend support to the euro and other riskier currencies, including the Australian and Canadian dollars, both of which gained against the greenback.
But even a euro relief rally based on a lifeline for Greece will be short-lived, the Credit Suisse analysts said, as other euro zone peripheral countries - notably, Portugal - wait in the wings with sovereign debt problems of their own.
Credit Suisse now looks for the euro to fall to 1.29 in the next three months, a downgrade from its previous forecast of 1.43 for the same period.
Beyond what many analysts see as the euro zone's structural problems - few political institutions underpinning a monetary union - the handling of the Greek debt crisis has "severely damaged" the notion that holding euro is a "safe alternative" to the US dollar, particularly among managers of central bank reserve funds, Credit Suisse said.
