The rand strengthened from its early morning levels by noon on Friday on the back of a weaker dollar, a local trader said.

At 11.54am the rand was bid at 7.6800 to the dollar from 7.7308 at its previous close. It was bid at 11.4095 to the euro from its previous close of 11.4385 and was at 12.7211 against sterling from 12.7705.

The euro was bid at $1.4838 from $1.4836 overnight.

"We have had a little dollar weakness, it's nothing major," the trader said.

"We are likely to be stuck in a range of 7-68-7.78 for the day," he said.

Said another trader earlier in the day: "The dollar generally pulled back on the GDP data, the rand benefited and that is why we are pretty much stronger against the dollar. I don't expect much for the day, the market will probably take a breather. I think we are probably reaching the bottom. I think we will stay in a range of about 7.70-7.80-7.82."

RMB analysts John Cairns and Nema Ramkhelawan said that after taking a moment to ponder recent events, investors have returned to the market enthused by the US Commerce Department's confirmation that the world's largest economy emerged from the depths of recession in 3Q09.

"Having weakened to 7.86, the ZAR forged new gains against the USD and recovered to around 7.74 despite dismal local data which showed a continued deterioration in SA's labour market. The local unit should remain elevated above the 7.70 level today given an array of event risk.

"While favourable global determinants, powered by greater risk appetite and month-end flows, might support the local unit at current levels and possibly encourage a slight strengthening in the ZAR, the outcome of local trade data could potentially offset some of the gains and generate greater volatility.

"Our expectations regarding the trade balance are far more bearish than the market, as we estimate a widening in the deficit to 2.5 billion rand (mainly due to a larger mineral products deficit, on account of higher oil/oil product imports) compared to a consensus forecast of minus 1 billion rand," said Cairns and Ramkhelawan.

They noted that the release of personal income and spending data in the US could provide relief to the dollar after it reassumed its weakening trend on Thursday.

Sellers go to ground

It was difficult to find sellers in South Africa's bond market on Friday as short covering, the healthier rand and the afterglow of rate cut positive data kept the market well bid.

By 12:17, the short-term government R154 bond was bid at 7.155 percent from a previous close of 7.160 percent. The medium-term R157 was at 8.410 percent from 8.500 percent, while the long-term R186 was bid at 9.040 percent from 9.100 percent.

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