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Johannesburg - The rand remained firmer against
the dollar in noon trade on Wednesday as it tracked a euro that had -
since early morning - rallied against the greenback.
"The rand is looking better but its fortunes will be determined by whatever drives the euro," a local currency trader said.
"The euro has had two solid days of being sold off but we hear today that some funds have been looking to reinstate long positions in the euro in the hope that all will be resolved in the end," he added.
At 11:31 local time, the rand was trading at 7.9966 to the dollar from its previous close of 8.0475. It was trading at 11.0284 to the euro from 11.0126 before, and at 12.8177 against sterling from 12.8515 previously.
The euro was at $1.3794 from $1.3657 previously.
RMB analysts said in their morning report that the eurozone crisis appeared to be back in full swing.
"Markets have retreated this morning, with a sub-8.00 open on USD/ZAR but it's clear that we're in for a very rough ride this week and probably for months to come."
RMB said the Greek prime minister must surely be the least loved person in the world at the moment.
"His announcement of a referendum, which risks a disorderly default, may have unravelled the entire new eurozone crisis package: it comes too early for the banks to be ring fenced and surely China and others aren't going to contribute anything meaningful to the bailout fund in this environment?"
RMB added that the prime minster would jet off to France today, having been "summoned" to meet with eurozone and IMF "bigwigs" in front of Thursday and Friday's G20 summit.
"Listen carefully and you'll probably be able to hear Chancellor Merkel shouting at him here in SA. Imagine the bitter taste for the IMF/eurozone as they hand across the EUR8bn bailout tranche tomorrow."
Papendreou was even unpopular at home.
"He barely managed to receive the support of his cabinet yesterday and faces a parliamentary no confidence vote on Friday. If his government falls, so does the idea of the referendum and perhaps the entire austerity package. A disorderly Greek default is becoming more and more likely."
And in the background Italy's crisis continued to fester, RMB said.
"The most worrying sign that the crisis is back in full swing comes from the eurozone money markets. Pressures eased following last week's package but the entire system appears to be freezing up again. Worrying signs indeed."
Europe remained the main issue for the markets but tonight there will also be a Fed policy announcement.
"No changes are expected but we'll be watching for signs that they are slowly moving towards QE3."
Meanwhile, Dow Jones Newswires reported that in European trading hours the euro remained higher against the dollar.
The greenback had edged down against its peers in Asian trade on Wednesday before a meeting at which the Federal Reserve was expected to revise down its economic projections, a step that would figure in talks over any further easing ahead.
At the end of a two-day meeting of the Fed's policy-setting Open Market Committee (FOMC), the central bank was expected to lower its growth projections through 2013 and predict unemployment could remain high, the Wall Street Journal reported.
The dollar was also weaker against the euro, despite mounting concern that political instability in Greece could jeopardise the agreement European leaders reached last week to contain the continent's debt crisis.
"Investors are adjusting positions before the FOMC, and also before the other events this week such as the ECB and G-20," said Motonari Ogawa, a senior foreign exchange dealer at Barclays Capital.
"The rand is looking better but its fortunes will be determined by whatever drives the euro," a local currency trader said.
"The euro has had two solid days of being sold off but we hear today that some funds have been looking to reinstate long positions in the euro in the hope that all will be resolved in the end," he added.
At 11:31 local time, the rand was trading at 7.9966 to the dollar from its previous close of 8.0475. It was trading at 11.0284 to the euro from 11.0126 before, and at 12.8177 against sterling from 12.8515 previously.
The euro was at $1.3794 from $1.3657 previously.
RMB analysts said in their morning report that the eurozone crisis appeared to be back in full swing.
"Markets have retreated this morning, with a sub-8.00 open on USD/ZAR but it's clear that we're in for a very rough ride this week and probably for months to come."
RMB said the Greek prime minister must surely be the least loved person in the world at the moment.
"His announcement of a referendum, which risks a disorderly default, may have unravelled the entire new eurozone crisis package: it comes too early for the banks to be ring fenced and surely China and others aren't going to contribute anything meaningful to the bailout fund in this environment?"
RMB added that the prime minster would jet off to France today, having been "summoned" to meet with eurozone and IMF "bigwigs" in front of Thursday and Friday's G20 summit.
"Listen carefully and you'll probably be able to hear Chancellor Merkel shouting at him here in SA. Imagine the bitter taste for the IMF/eurozone as they hand across the EUR8bn bailout tranche tomorrow."
Papendreou was even unpopular at home.
"He barely managed to receive the support of his cabinet yesterday and faces a parliamentary no confidence vote on Friday. If his government falls, so does the idea of the referendum and perhaps the entire austerity package. A disorderly Greek default is becoming more and more likely."
And in the background Italy's crisis continued to fester, RMB said.
"The most worrying sign that the crisis is back in full swing comes from the eurozone money markets. Pressures eased following last week's package but the entire system appears to be freezing up again. Worrying signs indeed."
Europe remained the main issue for the markets but tonight there will also be a Fed policy announcement.
"No changes are expected but we'll be watching for signs that they are slowly moving towards QE3."
Meanwhile, Dow Jones Newswires reported that in European trading hours the euro remained higher against the dollar.
The greenback had edged down against its peers in Asian trade on Wednesday before a meeting at which the Federal Reserve was expected to revise down its economic projections, a step that would figure in talks over any further easing ahead.
At the end of a two-day meeting of the Fed's policy-setting Open Market Committee (FOMC), the central bank was expected to lower its growth projections through 2013 and predict unemployment could remain high, the Wall Street Journal reported.
The dollar was also weaker against the euro, despite mounting concern that political instability in Greece could jeopardise the agreement European leaders reached last week to contain the continent's debt crisis.
"Investors are adjusting positions before the FOMC, and also before the other events this week such as the ECB and G-20," said Motonari Ogawa, a senior foreign exchange dealer at Barclays Capital.
