Rand firmer as risk appetite improves

Johannesburg - The rand was firmer against the dollar in noon trade on Tuesday as risk appetite improved and it tracked a euro that had risen earlier in Asian trade.

"To get your currency to strengthen all you need to do is get your country downgraded," a local currency trader quipped, referring to S&P's downgrades of several eurozone countries late on Friday.

The trader added that all risk currencies were better bid.

Referring to dollar rand, he said that there were "a decent amount of bids around the 8.00 level, and if the euro continues its moves we can get through 7.99."

At 11:35 local time, the rand was bid at R8.0067 to the dollar from its previous close of R8.0937. It was bid at R10.2124 to the euro from R10.2475 before, and at R12.2928 against sterling from R12.3946 previously.

The euro was bid at $1.2763 from its previous close of $1.2664.

Standard Bank said in a morning note that the market's reaction to S&P's and Fitch's ratings decisions had quickly faded.

"Having initially depreciated quite markedly on the back of Fitch's revised ratings outlook last week, the rand recovered most ground on Monday afternoon.

"In fact, the reaction to Fitch's re-rating of SA's outlook and downward adjustment of a number of European countries' ratings proved brief. The European Central Bank's rumoured buying of Italian and Spanish debt yesterday went a considerable way to calming market jitters."

Meanwhile Dow Jones Newswires reported that in foreign-exchange markets, the euro continued to gain ground against the dollar, boosted by data out of China earlier in the day.

China's GDP growth slowed slightly in the fourth quarter, marking an 8.9% rise from a year earlier in the fourth quarter, slower than the third quarter's 9.1% expansion, but higher than the 8.6% growth expected.