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Rand supported by export orders

Johannesburg - The rand's move above the R8 per dollar level was being capped by exporter demand in quiet midday trade on Wednesday.

"As soon as we move above R8 per dollar, exporters come in with orders, so that remains a good support level," a local trader said.

At 11:44 local time, the rand was bid at R8.0114 to the dollar from its previous close of R7.9878. It was bid at R10.5036 to the euro from R10.4450 before, and at R12.7307 against sterling from R12.6605 previously.

The euro was bid at $1.3111 from its previous close of $1.3078.

Standard Bank said in its morning commentary that the market reacted belatedly to disappointing US payrolls data released during the Easter holidays.

"March payrolls data reflected the weakest increase in five months of just 120 000, which was well below the consensus expectation. Emerging market stock extended losses, slumping to a two-month low, while commodity prices also felt the pinch.

"Unsurprisingly, the rand continued to weaken. Although yesterday's moves were likely exaggerated by the post-holiday catch up, and there could be a modest correction today, the rand is likely to remain on the back foot due to lingering concerns over Europe - Spain in particular - which are likely to keep the euro under pressure.

"Portfolio inflows by non-residents continue to head predominantly into the bond market, while interest in the equity market is minimal. This suggests that the search for yield rather than a good growth story continues to drive inflows.

"Nevertheless, with growth concerns top of mind ahead of China's GDP (gross domestic product) data later this week, a disappointing manufacturing print today, with the attendant GDP connotations, could spark a turnaround in equity portfolio flows, which have only recently turned to inflows, and thus further aggravate the rand's slide," the bank concluded.

Meanwhile, Dow Jones Newswires reported the yen held its gains against the dollar during Asian trading on Wednesday as diminished risk appetite increased the Japanese unit's safe haven appeal.

Surging Spanish bond yields, Tuesday's tumble in US stocks and weaker Chinese imports data all damped risk sentiment, analysts said. Some expect the dollar to test the ¥80.00 mark in the near term.

"Amid all of the negative sentiment building globally, the US dollar has barely found gains. Instead, the honour of top performer during the recent slide goes to the Japanese yen," said Christopher Vecchio, currency analyst at DailyFX.

In a sign of gradual improvement in the Japanese economy, core machinery orders rose 4.8% in February from the previous month, beating a forecast for a 0.5% decline, although the figures had little impact on the market.
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