Rand rallies eyeing R7.20 v USD

Johannesburg - The rand rallied in the afternoon session on Wednesday eyeing R7.20 versus the dollar, with a local trader citing the US Federal Reserve's interest rates policy statement on Tuesday as the prime catalyst.

At 15:41 the rand was bid at R7.2847 to the dollar from R7.3500 at its previous close. It was bid at R10.0060 to the euro from its previous close of R10.1129 and was at R11.1454 against the sterling from R11.1827.

The euro was bid at $1.3748 from $1.3766 previously.

A local currency trader said: "You can call it a rally for the rand, purely on the back of the Fed Reserve's statement on Tuesday. R7.25 is the next target against the dollar and then R7.20," he said.

Dow Jones Newswires reported that the dollar is mixed but mostly lower on Wednesday morning with the pound outperforming after some unexpectedly robust domestic jobs data.

The pound was propelled higher after the UK government reported that the number of people claiming unemployment benefits fell 32 200 last month, the largest drop since November 1997.

"That's really the big move for the day, I suppose," said Adam Cole, chief currency strategist at RBC Capital Markets in London.

The dollar was modestly lower against most other currencies as the US Federal Reserve's policy statement on Tuesday continued to influence the tone for currency trading into the new session.

"I think the market's taken the [Federal Open Market Committee] statement yesterday as positive for risk because the Fed seemed to be sending a signal of improving growth expectations but at the same time maintaining loose monetary policy," Cole said. "That's kind of an ideal combination for riskier assets," he said.

Wednesday morning, the euro was at $1.3762, compared with $1.3776 late on Tuesday, and a session high of $1.3819, according to EBS via CQG. The common currency was at Y124.53 from ¥124.31, while the dollar was at ¥90.50 from ¥90.22.

- I-Net Bridge