Rand steady despite Italy rumours

Johannesburg - The rand was steady against the dollar in noon trade on Wednesday as it tracked a euro that was holding its own, despite rumours in the market that Fitch might cut Italy's credit rating at month end.

"The Italian rumour did see the euro sell off for a bit," a local currency trader said.

"The past few days have been quite confusing when it comes to the rand," he said.

"The local currency has been quite resilient and we've seen good dollar rand buying interest from the 7.99 level today."

The trader said while local consumer price index data had been good for the rand, the figures hadn't really impacted much on the market.

At 11:33 local time, the rand was bid at R8.0214 to the dollar from its previous close of R8.0282. It was bid at R10.2491 to the euro from R10.2471 before, and at R12.2946 against sterling from R12.3278 previously.

The euro was bid at $1.2781 from its previous close of $1.2746.

Earlier Statistics SA said the increase in SA's consumer price index (CPI), used by the SA Reserve Bank (Sarb) for its inflation target, was 6.1% year-on-year (y/y) in December, from 6.1% y/y in November.

The inflation rate was expected to have ticked up slightly to 6.2% y/y in December from the 6.1% y/y seen in November, according to a survey of leading economists by I-Net Bridge.

Forecasts among the seven economists ranged from 6.1% to 6.3%.

CPI increased 0.2% month-on-month in December from 0.3% in November.

The annual average consumer rate was 5.0% in 2011 from 4.3% in 2010, 7.1% in 2009 and 11.5% in 2008. It was at 7.1% in 2007.

Standard Bank economist Shireen Darmalingam said: "While today's CPI data posted a lower-than-expected print, which could positively impact on consumer spending, the data is largely positive for the local currency from a real yield differential perspective.

"The rand is likely to continue drawing direction from international developments as participants become more engrossed in how the situation in Europe will eventually pan out."

Meanwhile, Dow Jones Newswires reported that in currency markets the euro is a little higher against the dollar, but many traders remain reluctant to push the single currency much higher amid further debt auctions this week and Greece's default risk.