G7 news sparks some rand gains

Johannesburg - News of a globally co-ordinated plan to pull Europe and the rest of the globe out of the credit mire, saw the rand gain over 10c in early trade on Monday.

At 08:27 on Monday the rand was bid at R9.1496 to the dollar from a previous close of R9.2680. It was bid at R12.5055 to the euro from a previous R12.5688 and at R15.5560 against sterling from R15.8567 before.

The euro was bid at $1.3636 from $1.3570 overnight, while gold was quoted at $862.45 a troy ounce from $851.85/oz overnight.

RMB said in its morning commentary the rand is holding steady, but with the VIX index showing record readings again on Friday (76.94), previous resistances up to 9.4400 could be retested, but that there is also a positive picture that could emerge.

"But as mentioned before any break of R9.1600/R9.1800 supports can see a deeper correction from the current rand oversold position," they add.

The analysts feel that one bit of positive information could be the nationalisation of UK banks - which is due for announcement this morning - bringing some sort of solace to financial markets.

Dow Jones Newswires reports agreeing that the global credit crunch requires "urgent and exceptional action," the G7 leading industrialised nations in their statement pledged to stabilise markets and prevent systemically important financial companies from collapse.

Treasury Secretary Henry Paulson said he and his G7 counterparts had agreed to an "aggressive" plan to deal with a financial turmoil that has quickly ballooned into a "global event."

Paulson also said that financial market volatility will likely continue for "a while," but that the G7's action plan should restore investor confidence.

Asian stock markets and Wall Street futures are rebounding in response, and European bourses are seen recovering as well. Government debt will see pressure. The euro is lower, with gold and oil higher.

- I-Net Bridge