The rand remained firm in morning trade on Tuesday following gains against a weakened dollar yesterday. The local currency is expected to trade in a range below the 8.00 rand per dollar level today, according to local traders.

At 9.03am the rand was bid at 7.8957 to the dollar from its overnight close of 7.8250. It was bid at 11.1968 to the euro from a previous 11.1325 and at 12.9988 against sterling from 12.9403.

The euro was bid at $1.4186 from $1.4227 overnight.

A local trader said the rand remained firm in morning trade, having strengthened yesterday on a weakened dollar and stocks.

"We are expecting a range of 7.82 to 7.96 against the dollar today," he said, adding that there was currently very little direction for the local currency to follow.

RMB analyst John Cairns said in his morning report that the ZAR has strengthened remarkably following a series of fortunate events. "Gill Marcus's appointment as the new SARB governor was well received by the market as her selection is indicative of the government's commitment to business-friendly policies. The succession process looks to be fairly smooth. Mboweni will serve three months under a new term, which will allow Marcus ample time to settle into her new role. This will help strengthen the SARB's standing as a responsible monetary authority and allay investor concerns given stakeholders' divergent views over monetary policy," Cairns said.

"A stronger ZAR is also a reflection of improved market sentiment. Internationally, the USD continues to fade against a basket of major currencies as global pressures abate and policymakers outline the way forward. EUR/USD has surged to 1.42 as global risk appetite improves, while US equities jumped on news that US lender CIT Group Inc secured a $3-billion credit facility from bondholders, which would help the company avoid bankruptcy," Cairns said.

He added that in a statement released yesterday, the Federal Reserve also acknowledged the need to curb accommodative measures to prevent inflation but has emphasised that potential "exit strategies" will only be considered once the recovery firmly takes hold. "Further detail on the US economic outlook and monetary policy is expected this afternoon as Fed Chairman Bernanke delivers his semi-annual testimony before the House Financial Services Committee," he said.

"With little in the way of event risk, it is unlikely that USD/ZAR will gyrate significantly today. We expect trade to be rather subdued and USD/ZAR to drift within a narrow range of 7.75 - 7.95," Cairns concluded.

I-Net Bridge

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