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Firm rand tracks euro

Johannesburg – The South African rand again tested a sustained push through 7.00 against the US dollar in midday trade on Tuesday, tracking the euro for direction.

At 11:44 local time the rand was bid at 6.9932 to the dollar from 6.9910 at the previous close. It was bid at 9.4244 to the euro from 9.4093 before and at 11.1006 against sterling from 11.3446 at its previous close.

The euro was bid at US$1.3421 from $1.3436 overnight.

A local dealer said: "We saw good bids below 7.00 against the dollar, and offers at 7.05. The euro has been the main driver, which we saw take a dip in the last hour, with the rand up to 7.05, but it has since came back again to test below 7.00.

"The trend is still for a stronger rand, which could test 6.95 against the dollar."

Dow Jones Newswires reports that the euro came under a fresh wave of selling pressure Tuesday on renewed fears about euro zone downgrades.

At one stage the single currency fell as far as $1.3381 but then bounced off support at that level. Analysts suggest that the euro could hit stop-losses and face a more violent fall if it breaks through the $1.3380 level.

The selloff came as the Spanish newspaper Expansion carried an article saying that analysts expect Moody's to reduce Spain's triple-A credit rating later this week. Moody's is the last of the major credit agencies to still have a top-grade rating for Spain.

Sentiment in the euro was knocked even further when a Standard & Poor's analyst told Irish radio that the credit rating for Anglo Irish Bank could be cut even lower if the bank needs more than a €35bn recapitalization from the Irish government. S&P has already reduced the rating of the Irish bank by three notches.

The dollar was left mixed as the market continues to mull a report in the Wall Street Journal that the Fed is considering less aggressive quantitative easing this time around. In other words, it will only introduce more bond purch.  

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Rand - Dollar
19.02
-0.6%
Rand - Pound
23.97
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Rand - Euro
20.53
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