Rand steady, eyes euro/USD play

Johannesburg - The rand remained firm but steady in midday trade on Tuesday, buoyed by positive investor sentiment.

A local dealer said the rand could strengthen to as much as R7.20 to the US dollar if the euro breaks decisively above $1.30 against the dollar.

He added that the local bond market is providing some support to the local currency.

At 11:33 local time the rand was bid at R7.3419 to the dollar from R7.3166 at Monday's close. It was bid at R9.5134 to the euro from R9.5216 before and at R11.3475 against sterling from R11.3420 at its previous close.

The euro was bid at $1.2971 from $1.2993 overnight.

A local dealer said: "The rand is strong on the back of the euro vs US dollar strength. The rand has also received some support from the local bond market, which has received about R22bn since the beginning of July 2010."

Dow Jones Newswires reported that the euro is struggling to stay over $1.30 on Tuesday even though general market sentiment remains accommodating for risk.

The dollar, meanwhile, is mostly higher, helped not only by the strength of US housing data on Monday but by expectations of stronger data later in the week.

The single currency got some support from last Friday's release of the European bank stress tests.

Although there remains some doubt over the credibility of the tests, the results were enough to boost general sentiment.

However, after an initial rally, the euro has struggled to push ahead, with each attempt to climb over $1.30 being met by fresh selling.

Currency strategists at the Royal Bank of Scotland suggested that there is still a chance that the euro could make it up to its next resistance at $1.3260-80. But added they are still looking to sell the euro around $1.30 "in broad terms".

  - I-Net Bridge