Rand still firm against the dollar

The rand remained firm but steady in midday trade on Tuesday, buoyed by positive investor sentiment.

A local dealer said the rand could strengthen to as much as 7.20 to the US dollar if the euro breaks decisively above 1.30 against the green back. He added that the local bond market is providing some support to the local currency.

At 11.33am local time the rand was bid at R7.34 to the dollar, R9.51 to the euro and R11.34 to the pound. The euro was bid at $1.2971 from $1.2993 overnight.

A local dealer said: "The rand is strong on the back of the euro vs US dollar strength. The rand has also received some support from the local bond market, which has received about R22 billion since the beginning of July 2010."

Dow Jones Newswires reported that the euro is struggling to stay over $1.30 Tuesday even though general market sentiment remains accommodating for risk. The dollar, meanwhile, is mostly higher, helped not only by the strength of US housing data on Monday but by expectations of stronger data later in the week.

The single currency got some support from last Friday's release of the European bank stress tests.