Rand firm against crosses

Johannesburg - The rand was firm against the crosses in the afternoon session on Tuesday, tracking a slightly weaker US dollar.

At 15:40 the rand was bid at R7.4507 to the dollar from R7.4800 at its previous close. It was bid at R10.4105 to the euro from its previous close of R10.4359 and was at R11.8976 against the sterling from R11.9381.

The euro was bid at $1.3937 from $1.3921 previously.

A local currency trader said: "We saw a bit of exporter selling earlier on, but since then the rand has quietened against the dollar, which has weakened, particularly against the smaller currencies.

"The local currency is firmer on the crosses."

Earlier, Dow Jones Newswire reported that the dollar slid against the euro early on Tuesday in New York as speculation that the European Commission will endorse Greece's plan to reduce its budget deficit on Wednesday lent support to the single currency.

The euro hit an intraday high against the dollar just before the New York trading got underway as spreads between 10-year Greek government bonds and similar German securities narrowed. The common currency also strengthened against major rivals, including the yen and the UK pound.

"The euro is being boosted moderately by (Wednesday's) potential agreement about how Greece is going to deal with its deficit," said Michael Hewson, a currency analyst at CMC Markets in London. "It (an agreement with the EU) eases concerns over Greece in the short term."

Early on Tuesday in New York, the euro was at $1.3947 from $1.3930 late on Monday, according to EBS via CQG.

The spread on 10-year Greek government bonds over bunds dipped below 330 basis points, down from the 400-basis-point peaks seen at the end of last week.

The cost of insuring Greek debt against default was also slightly better at 376 basis points from 380 basis points late Monday, according to CMA Datavision.

"Stabilisation of the Greek bond markets ahead of (Wednesday's) EU verdict on the Greek budget plan has provided only limited support for the euro," Brown Brothers Harriman strategists wrote in a note to clients. "The single currency has tended to react more to bad news from Greece than good news and today's euro rally may provide short-term traders with an opportunity to sell."

Greece had a budget shortfall close to 13% of gross domestic product in 2009. It has outlined spending cuts and measures to boost tax revenue, which it said will slash the budget deficit to 3% of GDP by 2012 - the limit set by European Union rules.

Investors will be eyeing the release of US pending home sales for December as well as Treasury Secretary Timothy Geithner testimony before the Senate Finance Committee on the President's fiscal year 2011 budget.

- I-Net Bridge