Johannesburg - The rand was range-bound in the morning session on Monday, with very little data out to provide direction.
At 09:02 the rand was bid at R7.3903 to the dollar from R7.3837 at its previous close. It was bid at R10.1603 to the euro from its previous close of R10.1862 and was at R11.2122 against the sterling from R11.2288.
The euro was bid at $1.3753 from $1.3773 previously.
A local trader pointed to a tight range of R7.38-R7.46 for the local currency against the dollar amid very little economic data to fuel direction.
RMB analysts in their morning report noted that the global central bank's policy tightening comes to the fore this week as the Fed meets to discuss interest rates. "A rate hike is unlikely before 4Q09 this year - and possibly much later - but the question is, how fast they are moving in this direction,"
said RMB analysts John Cairns and Nema Ramkhelawan.
"In particular, the markets are looking to see whether they remove the words "for an extended period of time" with regards their current zero interest rate policy. Our monthly report showed that historically, higher Fed rates detracted from flows into emerging markets. US dollar/rand also seems sensitive
to the US - SA interest rate gap. Nevertheless, we see this as only a sub-theme because the realistic expectation at this stage is that Fed hiking will come very slowly and that South Africa will not lag far behind.
"Attention otherwise remains on Euro/US dollar, the proxy for the Greek problems, and US equities, the proxy for the global recovery. As we set out on Friday, both these risk breaking higher through key technical levels. This could get rand gains going again," RMB said.
Dow Jones Newswires reported that the euro fell against the yen and dollar in Asia on Monday as weaker regional share markets prompted Asian hedge funds and other short-term players to sell the risk-sensitive currency to take profits following its rise on Friday.
With a monthly meeting of European Union finance ministers later in the day unlikely to yield any specific details of financial aid for fiscally strapped Greece, the single currency may fall further this week, dealers said.
In Tokyo on Monday, Japan's benchmark Nikkei 225 Stock Average was down 0.13% in early afternoon trade.
"The weaker stocks have led naturally to some profit taking," said Mitsuru Sahara, senior manager of the foreign exchange sales department at the Bank of Tokyo-Mitsubishi UFJ. Investors may be keen to lock in profits after the euro's rise on Friday as they think the unit may trend downward this week if European
authorities don't offer detailed financial support to Greece, he said.
Other dealers echoed that view. If Eurozone finance ministers "again don't deliver any concrete financial aid plans, that will simply be the latest bad news for the euro," said Shuichi Kanehira, a senior vice president in the forex division of Mizuho Corporate Bank.
At 04:50 GMT, the common currency was down at $1.3739 from $1.3762 late on Friday in New York. Against the yen, the euro stood at ¥124.50 compared with ¥124.57.
The common currency could fall to $1.3680 and ¥124.00 later in the day, said Mizuho Corporate Bank's Kanehira.
- I-Net Bridge