The rand remained softer against the dollar in noon trade on Wednesday as the greenback found support against the euro and yen on remarks made yesterday by the Federal Open Market Committee (FOMC).
“The rand is in ranges and it's not doing that badly against the crosses,” a local currency trader said.
“People have been saying that there's been a euro sell-off - but it's more like dollar buying,” he added.
He put dollar rand in a range of 7.50 to 7.60 for the remainder of the session.
At 11:32 local time, the rand was bid at R7.5467 to the dollar from its previous close of R7.5292. It was bid at R9.8480 to the euro from R9.8453 before, and at R11.8551 against sterling from R11.8215 previously.
The euro was bid at US$1.3057 from its previous close of US$1.3080.
RMB said in a note that there had been a sharp rise in German investor confidence yesterday and an even better-than-expected increase in US retail sales.
“The FOMC has played its part too, taking a moderately upbeat tone on the economy, noting that financial stresses have eased, while reporting that banks are much better placed to handle any further stress.”
RMB added that the biggest currency gainer from all this had been the US dollar.
“Could we be in for a dollar revival? This isn't something that the market seems to have seriously considered - it certainly isn't part of our medium-term thinking.”
RMB said dollar rand was being pulled in two directions: the great risk environment versus the stronger US dollar.
Meanwhile Dow Jones Newswires reported that investors had taken comfort in the FOMC's pledge to keep interest rates low, while acknowledging some improvement in the economy.
“What the statement does is recognize the improvement in the unemployment rate, the lessening in downside risks stemming from Europe, a less gloomy outlook for global growth, and the short-run risks to inflation stemming from higher oil prices,” Lloyds Bank Corporate Markets said. - I-Net Bridge