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Johannesburg - The rand held firm against the dollar in
early Friday trade, taking its cue from a resurgent euro after the European
Central Bank promised to hold the bloc together, boosting sentiment which has
been battered by nagging debt woes.
The rand earlier climbed to a week’s high of R8.2150 to the
greenback and was at R8.2235 by 06:30 GMT, up 0.26% from Thursday’s R8.2450
close.
Government bonds tracked the currency, pulling the yield for three-year paper down two basis
points to 5.34%, while the longer dated 2026 paper gave up four basis points to
7.22%.
The rand jumped two percent against the dollar on Thursday
after ECB Bank President Mario Draghi pledged to do whatever was necessary to
protect the eurozone from collapse.
“Support levels have been annihilated ... We are now firmly
in the old R8.05-R8.35 range from a couple of weeks ago,” said Warrick Butler,
a trader at Standard Bank.
“It is going to be interesting to see if the rand manages to
set a new lower low with a break of R8.0500 finally over the coming weeks.”
But Butler cautioned that market euphoria over Draghi’s
comments could be short-lived as there was a limit to what the ECB could do
within its mandate to control events in Europe.
The rand, a very liquid currency, has taken the brunt of
global market volatility over concerns that Europe’s debt problems could
spread, plunging to a three year low of R8.71 to the dollar in June.
Both the government and the Reserve Bank have warned that Africa’s biggest economy is unlikely to meet this year’s growth target of 2.7%, mainly to the downturn in the eurozone which absorbs about 25% of the country’s exports.
