After a slightly weak start, the rand was stronger in afternoon trade on Thursday as it tracked a strengthened euro following the European Central Bank's (ECB) announcement that interest rates would remain unchanged.
A local trader said the ECB meeting was the main focus for the day, and the rand made a slight recovery in the afternoon following ECB president Mario Draghi's announcement that the bank would keep the rate at 1 percent.
ECB president Mario Draghi said monetary policy was accommodative and that there was "absolutely" no contradiction between the growth compact and the fiscal compact, Dow Jones Newswires reported.
SA data released earlier today included the Business Confidence Index, which is measured by the South African Chamber of Commerce and Industry (SACCI). The index declined further, by 1.4 points, to 94.3 in April, which is the lowest level in three years and 8.2 points below the April 2011 level.
"The rand is stronger than expected," a local trader said, adding that it was strengthening and had remained above the R7.72 level to the dollar throughout the afternoon.
While the ECB meeting was the focus for the day, the rand would follow US non-farm payroll data tomorrow, he said.
At 16:33 local time the rand was bid at R7.7241 to the dollar from its previous close of R7.7253. It was bid at R10.1584 to the euro from R10.1547 before, and at R12.5001 against sterling from R12.5073 previously.
The euro was bid at US$1.3157 from its previous close of $1.3155.
Dow Jones Newswires reported that the euro had drifted lower against the dollar in European trading hours on Thursday as currency dealers awaited the ECB's monthly interest rate decision and press conference.
"The common currency edged down to as low as $1.3137 against the dollar, but remained close to the middle of the four-cent trading range that has prevailed over the last two months."
Bonds bolstered by offshore demand
South African bonds were up to 9 basis points firmer in late afternoon trade on Thursday, which a trader attributed to a spate of offshore buying and the steady rand.
Dow Jones Newswires said the European Central Bank held interest rates steady and President Mario Draghi revealed that the governing council didn't discuss a rate cut at their meeting.
Draghi said that the market's perception that there would be no near-term stimulus from the ECB is "correct".
At 15:50, the benchmark R157 bond was at 6.330 percent from its previous close of 6.390 percent. The R207 was bid at 7.410 percent and offered at 7.380 percent from a previous close of 7.480 percent and the R186 was trading at 8.050 percent from its close of 8.120 percent.