The rand was on the front foot in late trade on Wednesday as global risk appetite continues to improve with a bounce in equity markets as investors cheer the near-$900-billion US economic stimulus package proposed in the Senate on Tuesday night.

The local currency was unmoved by consumer inflation data for December which was slightly better than expected, increasing the chances of another interest rate cut at next week's Monetary Policy Committee meeting.

At 3.55pm the rand was bid at 9.8943 to the dollar from an overnight close of 9.9708. It was bid at 13.1136 to the euro from a previous 13.1589 and at 14.1406 against sterling from 14.1210 before.

The euro was bid at US$1.3265 from US$1.3182 overnight.

"The improvement in risk appetite is helping the rand. The local currency however paid no attention to the CPI data. It only seems to really move when the figures are a bit of a shocker. But we could see it moving next week if the MPC cuts rates. In the meantime, the rand is likely to remain in ranges," a local currency trader said.

The increase in South Africa's consumer price index excluding mortgage rate changes (CPIX) for metro and other areas, which is used by the South African Reserve Bank (SARB) for its inflation target, was up 10.3 percent year-on-year in December from 12.1 percent y/y in November, Statistics South Africa (Stats SA) said on Wednesday.

This is the fourth monthly decline after the record 13.6 percent registered in August.

The data also showed that CPIX hit 11.3 percent in 2008 from 6.5 percent in 2007 and CPI struck 11.5 percent from 7.1 percent in 2007.

CPIX was down -0.9 percent month-on-month after it increased 0.2 percent m/m in November.

This is, however, the twenty-first month running that CPIX has been above the 6 percent upper target limit. The previous all-time high before August this year for CPIX was the 11.3 percent set in 2002.

CPIX was expected to have increased at 10.4 percent y/y in December, according to I-Net Bridge's Econometer. Forecasts among the 13 economists surveyed ranged from 9.9 percent to 11.3 percent. CPIX was at 8.6 percent a year ago.

Re-weighting and re-basing of the CPI basket is set to take effect from the January data ? and thus be due in the end-February release - and is generally expected to bring inflation down to an extent, but it is still debatable as to exactly how much.

Dow Jones Newswires reports that the U.K. pound is at the lead of the ongoing rebound in investor risk appetite, gaining to one-week highs against the dollar and euro Wednesday.

Stimulus plans announced in the UK have mitigated expectations for rock bottom interest rates. As a result, the pound has reversed its sharp fall from the previous week, when it dropped to more than a 23-year low against the dollar.

The UK pound rose to a one-week high of $1.341, while the euro fell to £0.9261.

The euro has also benefitted against the dollar from this latest round of investor risk appetite. It is supported by stronger global equities, buoyed by a rebound in financial stocks after several sessions of losses due to worrisome headlines on the banking sector. Investors are gaining confidence that the Obama administration's near-$900 billion stimulus plan is closer to receiving Congressional approval. Stimulus packages in the euro zone are adding to the risk rebound as well. Germany's cabinet Tuesday approved a second two-year fiscal stimulus plan worth EUR50 billion.

Long end benefits from CPI

The long end of the South African bond market received succour from better-than-expected inflation data on Wednesday.

By 3.26pm the short-term government R153 bond was at 6.865 percent from its previous close of 6.885 percent. The medium-term R157 was at 7.450 percent from a previous 7.540 percent, while the long-term R186 was at 7.960 percent from 8.085 percent.