Johannesburg - The rand was steady against the
dollar in noon trade on Wednesday as it tracked a euro that was stuck in
ranges as investors mulled the implications of the second Greek
bailout.
"There's also the Budget Speech to consider later on today,
although I don't think we'll see anything major with regards to the
rand," a local currency trader said.
"However, players are reluctant to position heavily either way
until they see what the Budget contains," the trader added.
While Consumer Price Index (CPI) data had shown that inflation
had moved higher and this was rand negative, the figures had not
impacted the local currency, he added.
"Dollar rand is stuck in a 7.64 to 7.75 range at present and looking ahead I see a weaker rand."
At 11:33 local time, the rand was bid at R7.7260 to the dollar
from its previous close of R7.7313. It was bid at R10.2182 to the euro
from R10.2386 before, and at R12.1567 against sterling from R12.1995
previously.
The euro was bid at US$1.3221 from its previous close of US$1.3249.
Earlier Statistics SA said the increase in SA's CPI was 6.3% year on year (y/y) in January from 6.1% y/y in December.
The inflation rate was expected to have ticked up slightly to
6.2% y/y in January, according to a survey of leading economists by
I-Net Bridge. Forecasts among the economists ranged from 6.1% to 6.3%.
At 14:00 local time, SA Finance Minister Pravin Gordhan will deliver his Budget Vote Speech.
Meanwhile Dow Jones Newswires reported that in European
markets, the euro traded in tight ranges against the dollar as doubts
remained on Greece's ability to put its debt load on a sustainable
footing.
Although Greece had, in principle, secured a second bailout
deal, there were still many questions to be asked about implementation
and how effective the deal would be.
The next step was to see how willingly private sector
creditors would participate in the deal. The Institute of International
Finance had negotiated a deal on behalf of private holders of Greek debt
that would see a 53.5% reduction in the nominal value of their
holdings.
There are, however, still concerns about contagion risks.
Dominic Rossi, global chief investment officer of equities at
Fidelity Worldwide Investment said: "A Greek default has been priced
into equity markets but what is far less clear is the implications for
other nations, particularly Portugal, Spain and Italy. Whilst we
appreciate progress has been made, particularly in Italy ... this
remains a multi-year workout during which they will remain vulnerable to
external shocks such as a Greek default."
In fact, Portugal's 10-year government bond yield did not
paint a pretty picture as in European trade mid-morning, its yield was
up 3.90 basis points at 12.031%.
And purchasing managers' figures for the eurozone's largest economies were also a little disappointing.
French business activity grew at a reduced pace in February.
The composite purchasing managers' index for France fell to 50.6 in
February from a five-month-high of 51.2 in January. A reading above 50
signals growth.