The rand gained further ground against the major currencies at midday on Friday‚ buoyed by the resolutions of the European Union (EU) summit to tackle the region’s festering debt problems.

At 11:49 the rand was bid at R8.2654 to the dollar from its previous close of R8.3979. It was bid at R10.3956 to the euro from its previous close of R10.4569 and at R12.8726 against sterling from R13.0315 before. The euro was bid at US$1.2578 from its previous close of $1.2446.

“The rand has broken through the 8.27/US dollar support level‚ which means it could easily trade down to 8.20. That said‚ I don’t think this is a risk-on environment yet. The markets were desperate for some good news‚” said Lynden Reabow‚ FX trader at PSG Prime.

EU leaders unexpectedly came up with much-needed plans to ease concern about the bloc’s sovereign-debt and banking problems.

EU leaders announced the opening of access to two bail-out funds - the European Financial Stability Facility and its successor‚ the European Stability Mechanism (ESM) - for eurozone countries not already receiving assistance‚ with an eye to stabilising volatile markets‚ Dow Jones Newswires reported.

European Council president Herman van Rompuy said the European Commission would propose a single bank supervisor‚ after which eurozone banks would have direct access to the ESM.

“The news of a direct capital injection without worsening sovereign debt positions is positive for Spain‚” said Yuji Saito‚ director of foreign exchange at Credit Agricole Bank in Tokyo.

Short end droops despite rand

The short end of the South African bond curve drooped in midday trade on Friday despite a firmer rand and an 89 cents per litre cut in the retail petrol price‚ which will be implemented on July 4.

“The long end just continues to power ahead on the back of a firmer rand‚ but the short end lacks vigour as it may have been over-bought earlier in the week. In addition‚ we got a nice Independence Day present in the form of a petrol price cut‚ which will reduce inflation even further‚” a local trader said.

At noon‚ the benchmark R157 bond was trading at 5.990 percent from Thursday’s close of 5.985 percent. The R207 was bid at 7.135 percent and offered at 7.115 percent from a previous close of 7.115 percent and the R186 was trading at 7.930 percent from its previous close of 7.935 percent.