The rand was virtually unchanged from its overnight levels in the morning session on Wednesday, awaiting further moves from a cautious euro ahead of a decision on Greece by European Union leaders.

At 08:53 the rand was bid at 7.6500 to the dollar from 7.66 at its previous close. It was bid at 10.5483 to the euro from its previous close of 10.5762 and was at 12.0102 against the sterling from 12.0407.

The euro was bid at $1.3765 from $1.3780 previously.

A local currency trader noted that the rand was tracking the euro movement, which has a possible break through of 1.38 against the dollar. That would then see the local currency through to 7.64 against the greenback, the trader said.

RMB analysts noted in their morning report that according to The Wall Street Journal sources, "Germany is considering a plan with its European Union partners to offer Greece and other troubled Eurozone members loan guarantees in an effort to calm fears of a government default and prevent a widening of the credit woes". Reuters has seemingly independently heard the same thing.

"There has been no official confirmation ? according to the reports this is probably likely next week. For now, the cost of insuring against a Greek default is falling sharply," RMB said.

"Interestingly Euro/US dollar hasn't seen commensurate gains. With such sharp speculative short positions against the Euro, the fear has been that a fundamental change in the Greek story could see a sudden snap back to the 1.40 level or above. This still seems possible, if and when, the official announcement comes. By implication there is now a massive two-way risk on US dollar/rand.

"If there is no confirmation we should see 8.00, a bailout for Greece and we should see 7.50," RMB analysts John Cairns and Nema Ramkhelawan said.

Dow Jones Newswires reports that the euro fell against the yen and dollar in Asia Wednesday as the risk-sensitive currency's rebound took a breather, but dealers said any continued gains in global share markets could buoy the European unit later.

A scheduled meeting of European Union leaders Thursday to discuss plans to help fiscally strapped Greece and other euro-zone members may also support the unit for the rest of the week, they added.

The less pessimistic outlook for the euro came after German Finance Ministry Spokesman Michael Offer said overnight that Thursday's meeting would focus on further measures to help Greece improve its tattered finances.

"People are expecting something forward-looking from this meeting, and so even if it doesn't yield a lot more detail on these reported plans, I think the euro has a strong chance of getting back on a recovery track for the rest of the week," said Mitsuru Sahara, a senior foreign exchange dealer at Bank of Tokyo-Mitsubishi UFJ.

In Tokyo trade Wednesday, however, non-Japanese investment banks' proprietary trading desks and hedge funds took advantage of the euro's rise both overnight and early morning in order to lock in profits, dealers said.

That pushed the common currency down to $1.3754 from $1.3779 late on Tuesday in New York. Together with some selling by Japanese exporters on a regular settlement day, it also weighed the euro down to Y123.40 from Y123.52.

Also hurting the risk-sensitive euro were the weaker-than-expected Chinese export figures released midday in Tokyo. Exports rose 21.0 percent on year in January, falling short of expectations for a 28.5 percent gain. That prompted hedge funds and other short-term players to further trim euro positions, dealers said.

But euro sentiment was less bearish, dealers said, as Japan's benchmark Nikkei 225 Stock Average was up 0.8 percent midday, and as players expected, albeit guardedly, positive developments in the Greek issue, dealers said.

"The market sentiment is still cautious, but people's views on the euro are a bit less dire today," said Shinichi Hayashi, a foreign exchange dealer at Shinkin Central Bank. For the rest of the day, "investors will be watching share market moves in Europe and the US and if they gain, it will help the euro," Hayashi said.

Bonds steady, eye SONA, Budget

South African bonds were steady in quiet early trade on Wednesday as market players now await the State of the Nation address on Thursday evening and next week's national Budget.

By 09:10 the short-term government R154 bond was bid at 7.225 percent and offered at 7.205 percent after closing at 7.210 percent on Tuesday and the medium-term R157 was at 8.350 percent from 8.360 percent at its previous close. The long-term R186 was bid at 9.130 percent and offered at 9.100 percent from 9.100 percent previously.