Johannesburg - The rand was at a two-month high against the
dollar in early Wednesday trade, as the euro gained and commodity prices were
slightly firmer, all supporting the rand’s attempt at firmer levels.
The rand opened firmer below R8 resistance and gained to a
high of R7.8961, a level it last hit on November 14.
Dealers said continued euro strength has assisted the rand
to test beyond the R7.90 level to the dollar.
"Event risk remains around the outcomes of the Greek PSI
talks, but we like the rand to remain strong as risk-on trades remain in play,"
said Brigid Taylor, head of institutional sales at Nedbank.
The euro was trading at 1.3020 to the dollar at 06:30 GMT.
If the rand convincingly breaks R7.90, it opens the door to
R7.75 levels.
Bonds followed the currency firmer and yields dropped on the
government benchmarks.
The yield on the three-year bond was down by 6.5 basis
points to 6.585%, while the longer 2015 issue gave up 5 basis points to 8.265%.
The government will announce its issuance plans for next
week at 09:00 GMT, following a successful sale of 2017 and 2021 bonds in the
previous session which saw prices rise substantially.
Market focus will be on the Greek talks about avoiding a
messy default that would raise the likelihood of contagion to other eurozone
countries and depress global economic growth.
Investors are likely to completely shun risky emerging
market assets in such a scenario and local dealers would have to position
themselves accordingly.