Rand looks to break R7.20 against the dollar

The rand looks looking set to test the key 7.20 per dollar level in early trade as the euro firmed sharply as the euro-zone backed support package for troubled Greece.

At 8.15am the rand was bid at R7.21 to the dollar, R9.83 to the euro and R11.12 to the pound. The euro was bid at $1.3643 from $1.3630 previously.

RMB analysts said in their morning report that USD/ZAR looks likely to dip through 7.20, but it's not clear that conditions for a decisive break are yet in place.

"The key question we need to answer is whether the new Eurozone/IMF Greek bailout package will stop the EUR rot and allow improving global fundamentals to feed through into commodity currencies?," they said.

Dow Jones Newswires reported the euro is higher against major rivals, including the UK pound, on Monday as the euro-zone's backing of Greece puts to rest uncertainty that roiled markets last week.

A hefty support package for debt-laden Greece will provide the euro solid support this week, with the common currency stretching toward $1.40 in the near term.