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Rand helped by manufacturing data

Johannesburg - The rand was helped by strong February manufacturing data in afternoon trade on Wednesday.

"We got a boost from the manufacturing data as it showed that we could in fact be growing faster this year than last year," a local trader said.

The February manufacturing production volume index rose by 4.1% year-on-year (y/y) after a 2.3% y/y increase in January and a 2.6% gain in 2011.

At 18:00 local time, the rand was bid at R7.9956 to the dollar from its previous close of R7.9878. It was bid at R10.4780 to the euro from R10.4450 before, and at R12.6921 against sterling from R12.6605 previously.

The euro was bid at $1.3108 from its previous close of $1.3078.

Standard Bank said in its reaction to the manufacturing data that while the data did not directly impact on the local currency, the stronger print had positive implications for gross domestic product growth.

"This could spark a renewed interest in equity portfolio flows, which have only recently turned to inflows, and thus see the local unit strengthen.

"Despite the positive data, we believe that the rand is likely to remain on the back foot in the short to medium term due to lingering concerns over Europe with a particular focus on developments in Spain," the bank said.

Meanwhile, Dow Jones Newswires reported the yen held its gains against the dollar during Asian trading on Wednesday as diminished risk appetite increased the Japanese unit's safe haven appeal.

Surging Spanish bond yields, Tuesday's tumble in US stocks and weaker Chinese imports data all dampened risk sentiment, analysts said. Some expect the dollar to test the ¥80.00 mark in the near term.
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