Softer rand eyes R7.78 vs dollar

Johannesburg - A softer rand was firmly out of its tight range by midday on Wednesday testing the topside of a broader range at R7.78 against the dollar.

A local currency noted that the rand did not react to the consumer price index (CPI), out at 11.30.

The increase in South Africa's CPI, which is used by the South African Reserve Bank (Sarb) for its inflation target, was up 6.2% year-on-year (y/y) in January from 6.3% y/y in December, Statistics South Africa (Stats SA) said on Wednesday.

At 12:01 the rand was bid at R7.7480 to the dollar from R7.7550 at its previous close. It was bid at R10.5180 to the euro from its previous close of R10.4760 and was at R11.9754 against the sterling from R11.9872.

The euro was bid at $1.3544 from $1.3523 previously.

A local currency trader said: "We saw the rand weaken overnight, testing R7.78 against the dollar to the topside. We spent time there this morning, but not for any significant amount of time.

"We have broken out of the tighter range of R7.64-74 against the dollar, but on a broader range, R7.78 has been a key figure for some time. The market has seen aggressive trading against the euro, so we could see further rand weakness by this evening."

Dow Jones Newswires reports that in the foreign exchanges, currencies were trading in tight ranges, with the focus squarely on Bernanke's testimony. "Step by step, the Fed is going to get closer to an exit, which will decrease the dollar's liquidity anyway. That's positive for the dollar in the longer term," said Barclays Capital chief Japan foreign exchange strategist Masafumi Yamamoto.

At 09:10 GMT, the dollar stood at ¥90.09, from ¥90.18 in late New York trade on Tuesday, while the euro stood at $1.3525 from $1.3496.

- I-Net Bridge