Graphic: renjith krishnan

The rand was firmer against the dollar in noon trade on Monday as it tracked a euro that continued to gain ground after the Greek vote.

“We've moved back into a risk-on environment it seems,” a local currency trader said.

“Markets, however, are slightly stagnant and it could be a slow day,” he added.

At 11:32 local time, the rand was bid at R7.6617 to the dollar from its previous close of R7.7433. It was bid at R10.1545 to the euro from R10.2254 before, and at R12.1058 against sterling from R12.1933 previously.

The euro was bid at US$1.3262 from its previous close of US$1.3239.

Barclays Capital said in a note that the rand had weakened about a percent on Friday afternoon on concern about the potential content of Saturday's press conference at the SA Reserve Bank.

However, news that the only change was to the look of SA's banknotes was greeted with a relief rally of about a similar size by the time of the market open today.

Barclays Capital added that to the extent that global markets were able to take positives from Greece's approval of tough new austerity measures, risk assets like the rand were likely to strengthen further.

“But market optimism regarding Greece may be somewhat tempered given the widespread and violent scenes of public discontent ahead of the vote. The euro has enjoyed some short covering in the wake of the parliamentary decision, because a disorderedly Greek default has been avoided for the time being.”

Meanwhile Dow Jones Newswires reported that late on Sunday, the Greek parliament passed a package of spending and wage cuts worth around 3 billion euros this year alone.

The passing of the package was a condition set by eurozone finance ministers for the approval of a second bailout of at least 130 billion euros from eurozone governments and the International Monetary Fund. Greece needed the bailout if it was to avoid a disorderly default in March, when an EUR14.5 billion bond repayment was due.

But Monday's gains were fragile, coming against a backdrop of violent protests in Athens which highlighted the difficulties faced by Greek authorities in implementing the measures - the next crucial phase in the process.

At the same time, traders pointed to the fact that Greece still hadn't reached a deal with its private creditors on the haircut they would be willing to take on their holdings of government bonds. Greece was expected to make its official proposal by the end of this week.

“Getting financial support through a second bailout will not magically solve all Greek problems, though. Many issues remain open, and these are often interconnected,” said ING.

“The big question mark relates to when Greece will be able to return to positive economic growth. We reckon this will unlikely materialise before the second half of 2013; a long time framework over which Greek citizens might get increasingly disaffected to the adjustment package - they already are - and to those imposing it.”

ING added that the second bailout would probably come with tighter strings attached. The bailout was expected to be approved at a meeting of European Union finance ministers on Wednesday. - I-Net Bridge