"We have had a surfeit of bad news since August last year‚ so when things are quiet‚ then the rand gains‚" a local foreign exchange trader said.
In morning trade the rand was bid at R9.8576 against the the dollar from Tuesday's close of R9.8464.
The local currency was bid at R12.9497 against the euro from its previous close of R12.9525 and was at R14.8931 against sterling from R14.9062 at its previous close.
The euro was bid at US$1.3133 from US$1.3150 at Tuesday's close.
Absa Capital said in its morning report that the rand strengthened to R9.77 against the dollar in intra-day on Tuesday‚ but once again failed to sustain a downward breach of R9.85 by the end of the trading session.
"Yesterday's announcement that a local telecommunication company (Cell C) would receive a US$350m injection from its offshore holding company this year would have been rand supportive‚ but we believe that the bulk of Tuesday's strength was a function of a stronger euro environment.
"The euro rallied on the back of growing speculation that Federal Reserve chairman Ben Bernanke would lower expectations of an imminent reduction of the Fed's quantitative easing (QE) programme by delivering a dovish message during his biannual address to Congress.
"Based on Barclays view that the Fed will start tapering QE as early as September and given yesterday's pre-emptive euro strength‚ we believe the risk lies in the statement proving to be less dovish than expected.
"In turn‚ this could cause the dollar to start strengthening again and for risky assets like the rand to see a fresh wave of selling pressure and move back up around the R10.00 mark ahead of Thursday's (18 July) Monetary Policy Committee decision‚ whether to keep the repo rate on hold‚" Absa Capital said.
Source: BDLive via I-Net Bridge
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