Rand continues to track euro

The South African rand continued its range bound trade by midday on Tuesday tracking the euro's movement against the dollar for direction.

At 11.41am the rand was bid at R7.3226/$ from R7.3019/$ at its previous close. It was bid at R9.9034/€ from its previous close of R9.9226/€ and was at R10.9788/£ from R11.0423/£.

The euro was bid at $1.3520 from $1.3566 previously.

A local trader said: "The rand has seen very little action so far today, sitting in a ten cent range of 7.31-7.41 against the dollar.

"It is quite difficult to gauge which way the market is turning," he said adding that the local market would track euro/dollar movement for further indication.

He said that the better than expected current account deficit failed to have any impact on the exchange, but pointed to Thursday's MPC rate decision as a potential market turner.

South Africa's current account deficit reduced to -2.8% of GDP in the fourth quarter of 2009 from -3.1% in the third quarter, the South African Reserve Bank said in its latest quarterly bulletin issued Tuesday.

For calendar 2009, the deficit was -4.0 of GDP compared to -7.1% for calendar 2008.

A survey of ten leading economists by I-Net Bridge had pinned the Q4 current account deficit down at -3.6% of GDP. The forecast range for the expected deficit varied from -4.3% to -3.5% of GDP.