The rand was range bound in the morning session on Wednesday, tracking movement from the single currency.

At 8.57am the rand was bid at 7.3982 to the dollar from 7.3777 at its previous close. It was bid at 10.0505 to the euro from its previous close of 10.0385 and was at 11.0502 against the sterling from 11.0626.

The euro was bid at US$1.3583 from US$1.3605 previously.

A local trader said: "There is very little movement at the moment with the rand in a tight range of 7.37-44 against the dollar, tracking the euro."

RMB analysts in their morning report noted that the managing director of the IMF, Dominique Strauss-Kahn, weighed in on the debate on artificially weakening the rand, saying that it would be a "very short-sighted" move for SA to make.

Strauss-Kahn stressed the importance of maintaining investor interest in South Africa, citing the weakening of the rand as a possible deterrent to capital market inflows, which is used to finance the country's expansive current account deficit, a concept that we continue to emphasis as a risk to our long-term US dollar/rand forecast, RMB said.

"The local unit has however been rather subdued of late and is expected to trade within a 10-15c range today owing to moderate event risk. A mild bout of risk aversion and marginally lower commodity prices appear to have tempered ZAR gains, though support is still evident around US dollar/rand 7.34," analysts John Cairns and Nema Ramkhelawan said.

Euro/US dollar is poised at 1.36 but could drift slightly lower as a result of political squabbling within the EU. The proposal of a European Monetary Fund has already drawn widespread criticism and generated tension between Germany and France. "There could be more trouble on the horizon as the allies pursue the tightening of regulations to limit speculative trading in sovereign debt markets. Though united in a common cause the two countries appear divided on whether to ban or merely suspend naked short selling of credit default swaps," RMB said.

Dow Jones Newswires meanwhile reported the euro ticked up against the yen in Asia Wednesday, as Japanese importers buying the single currency on a regular settlement day set the tone of the market amid a lack of other trading cues.

But further gains are far from certain, dealers said, with the euro's near- term direction resting on developments in the euro-zone's fiscal problem and upcoming economic data.

As of 0450 GMT, the euro stood at Y122.44, slightly up from Y122.36 in New York late Tuesday. Against the dollar, the unit traded at $1.3602 from $1.3601.

"Overall currency moves were very limited" with share markets almost unchanged and a lack of major economic data, meaning that Japanese importers' buying flows became more dominant and set the trend, said Yuzo Sakai, a foreign-exchange manager at Tokyo Forex & Ueda Harlow.

Dealers said the European single currency could fall toward $1.3300 and Y119.00 over the next few weeks if any negative news emerges on Europe's fiscal issues, adding to concerns over its economic outlook.

The focus is on European countries' huge levels of debt, said Hideaki Inoue, a chief foreign-exchange manager at Mitsubishi UFJ Trust and Banking Corp. "Growing expectations for sovereign debt default could prompt mid and long-term players to sell" the euro, he said.

Although most players are bearish toward the euro, better-than-expected economic data could help restore investor confidence, possibly buoying the risk-sensitive euro toward $1.3700 and Y123.50, some dealers said.

Investors will monitor US retail sales for February and Reuters/University Of Michigan Consumer Sentiment Survey for March, both due Friday, for any hints on the health of the global economy.

Bonds little changed overnight

Bonds were little changed from overnight levels in quiet trade on Wednesday. There is no major local economic data due today, with manufacturing and mining production on Thursday likely to remain the key focus.

By 8.50am the short-term government R154 bond was bid at 7.235 percent and offered at 7.035 percent after closing at 7.140% on Tuesday and the medium-term R157 was at 8.245 percent from 8.250 percent at its previous close. The long-term R186 was bid at 9.085 percent and offered at 9.035 percent from 9.070 percent previously.