Rand edges up against dollar

Johannesburg - The rand was slightly firmer against the dollar in early Wednesday trade and was expected to stay in current ranges as risk aversion appeared to ebb after debt woes in Europe and the US triggered a heavy sell-off last week.

Government bonds rose and yields edged lower, with the four-year bond touching a new multi-year low as demand for local debt remains buoyant on market expections domestic interest rates will stay unchanged this year and maybe well into 2012 as well.

The rand touched its strongest level so far in the session of R7.1120/dlr and was at R7.1276 by 06:48 GMT, up 0.36% from Tuesday's close of R7.1490.

"We seem to have drifted off into ranges after the excitement of last week, it's going to take something special on the euro or perhaps on the stock exchange front - some form of risk-off scenario - for the rand to move out of these ranges," RMB trader Jim Bryson said.

"For now we're stuck in a R7.08-20 type of range and really looking for outside influences to drive us out. I think the longer we remain in this range the more likely that we're going to get closer to R7.00. Only above R7.25 do we start to run."

Retail sales data due out at 11:00 GMT is likely to show sluggish year-on-year growth, cementing the view that the Reserve Bank will not raise interest rates this year to give the struggling economy some breathing space.

Markets are even pricing in the slight change of another cut in the repo rate, which the central bank progressively slashed to a 30-year low of 5.5% between December 2008 and November last year.

Yields have fallen sharply in recent weeks and on Wednesday the benchmark 2015 issue shaved off another three basis points to 6.80%, a new multi year low.

The yield on the longer dated 2026 also fell 3.5 basis points to 8.145%.

The JSE Top 40 - (Tradeable) [JSE:J200] September futures contract ALSIc1 was up 1.84% pointing to a strong start for the local bourse at 07:00 GMT.