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Johannesburg - The rand was flat against the dollar in midday trade on Wednesday, as it tracked a euro that had come off its highs against the greenback, as concerns set in that eurozone leaders might disappoint at the region's summit due to begin on Thursday evening.
"The rand is stuck in a range at the moment as markets wait for the eurozone summit," a local currency trader said.
He put dollar rand in a range of 7.96 to 8.06 for the remainder of the session.
The trader said that markets had ignored reserves data from the SA Reserve Bank released earlier on Wednesday.
At 12:01 local time, the rand was bid at 8.0145 to the dollar from its previous close of 8.0148. It was bid at 10.7563 to the euro from 10.7449 before, and at 12.5117 against sterling from 12.4988 previously.
The euro was bid at US$1.3422 from its previous close of US$1.3409.
On Wednesday the SA Reserve Bank announced that its dollar-denominated holdings of gold and foreign assets had declined by US$695 million to US$49.650 billion in November from US$50.345 billion in October,
RMB analysts noted in a morning report that sentiment was improving again although it was not clear whether this would be enough to get the rand through support at R7.96/98.
"Global markets have managed to shrug off the S&P European rating threat pretty quickly. Rating downgrades for Europe, after all, are nothing new. Attention is now back on Friday's EU summit," they wrote.
"Optimism is running high. The latest hope is that the existing bailout fund (the European Financial Stability Fund or EFSF) will continue to operate alongside the new permanent bailout fund (the European Stability Mechanism or ESM that starts operating from mid-year), thus doubling resources. Combined with more money from the IMF and the planned rules to enforce fiscal sustainability, maybe this would be the 'bazooka' that everyone is looking for - or will at least open the way for the ECB to bring out its own 'bazooka'," they said.
Meanwhile, Dow Jones Newswires reported that the euro had traded higher against the dollar in Asian trading hours on Wednesday before giving up some gains in European trading hours.
Some traders in in Asia were awaiting the outcome of the upcoming European Union summit.
"The market's expecting an all-encompassing plan, including greater participation by the European Central Bank; anything short of expectations will no doubt thrust the eurozone debt crises well and truly back into the spotlight after a reprieve of sorts in recent days," said Chris Gore, currency strategist at GO Markets in Melbourne.
Investors expected the summit to yield a breakthrough on the eurozone's sovereign debt crisis, even as Standard & Poor's Credit Services warned that many of the sovereign credit ratings within the 17-nation currency bloc were being jeopardised by mounting financial and political turmoil.
"S&P is trying to take a shot across the bow and get them to deliver," said Brian Kim, currency strategist at RBS Securities. With Europe having a well-established history of failing to deliver on promised policy changes, investors remain skeptical, he said.
An ECB policy meeting on Thursday, where the central bank was widely expected to cut borrowing costs to jumpstart the moribund eurozone economy, was also keeping traders on hold. "For now, everyone's keeping one eye trained on the summit and the other on the ECB meeting."
"The rand is stuck in a range at the moment as markets wait for the eurozone summit," a local currency trader said.
He put dollar rand in a range of 7.96 to 8.06 for the remainder of the session.
The trader said that markets had ignored reserves data from the SA Reserve Bank released earlier on Wednesday.
At 12:01 local time, the rand was bid at 8.0145 to the dollar from its previous close of 8.0148. It was bid at 10.7563 to the euro from 10.7449 before, and at 12.5117 against sterling from 12.4988 previously.
The euro was bid at US$1.3422 from its previous close of US$1.3409.
On Wednesday the SA Reserve Bank announced that its dollar-denominated holdings of gold and foreign assets had declined by US$695 million to US$49.650 billion in November from US$50.345 billion in October,
RMB analysts noted in a morning report that sentiment was improving again although it was not clear whether this would be enough to get the rand through support at R7.96/98.
"Global markets have managed to shrug off the S&P European rating threat pretty quickly. Rating downgrades for Europe, after all, are nothing new. Attention is now back on Friday's EU summit," they wrote.
"Optimism is running high. The latest hope is that the existing bailout fund (the European Financial Stability Fund or EFSF) will continue to operate alongside the new permanent bailout fund (the European Stability Mechanism or ESM that starts operating from mid-year), thus doubling resources. Combined with more money from the IMF and the planned rules to enforce fiscal sustainability, maybe this would be the 'bazooka' that everyone is looking for - or will at least open the way for the ECB to bring out its own 'bazooka'," they said.
Meanwhile, Dow Jones Newswires reported that the euro had traded higher against the dollar in Asian trading hours on Wednesday before giving up some gains in European trading hours.
Some traders in in Asia were awaiting the outcome of the upcoming European Union summit.
"The market's expecting an all-encompassing plan, including greater participation by the European Central Bank; anything short of expectations will no doubt thrust the eurozone debt crises well and truly back into the spotlight after a reprieve of sorts in recent days," said Chris Gore, currency strategist at GO Markets in Melbourne.
Investors expected the summit to yield a breakthrough on the eurozone's sovereign debt crisis, even as Standard & Poor's Credit Services warned that many of the sovereign credit ratings within the 17-nation currency bloc were being jeopardised by mounting financial and political turmoil.
"S&P is trying to take a shot across the bow and get them to deliver," said Brian Kim, currency strategist at RBS Securities. With Europe having a well-established history of failing to deliver on promised policy changes, investors remain skeptical, he said.
An ECB policy meeting on Thursday, where the central bank was widely expected to cut borrowing costs to jumpstart the moribund eurozone economy, was also keeping traders on hold. "For now, everyone's keeping one eye trained on the summit and the other on the ECB meeting."
