SA rand firms against US dollar

The South African rand was firmer against the US dollar in early morning trade on Thursday as it tracked a euro that had been buoyed by a positive vote in the Greek parliament.

"We see rand-dollar in a range of 6.75 to 6.82 for now," a local rand trader said.

"We're following a euro that may - allowing for dips - strengthen, although we do have an American long weekend coming up. But overall we're looking for rand strength over the next few days," he added.

At 08:39 local time, the rand was bid at 6.7681 to the dollar from 6.7928 at its previous close. It was bid at 9.8356 to the euro from 9.8279 before, and at 10.9018 against sterling from 10.9036 previously.

The euro was at US$1.4493 from US$1.4477.

RMB analysts noted in a morning report that global financial markets had gone into epileptic spasms before the Greek vote but then bizarrely went nowhere once approval of the bill had been secured.

"It's only this morning that the positive sentiment is starting to be reflected, with EUR/USD breaking past 1.45 and USD/ZAR into the 6.70s.

"And with the ZAR lagging somewhat, it seems that moves into the low 6.70s can be forthcoming. Given the size of the majority in yesterday's vote, 155 - 138, it seems that today's second Greek parliamentary vote - due after 13:00 South African time - will pass without problem. Once it's out of the way, attention can switch back to global data."

RMB added that with the final passage of the austerity bill, Greece would be 80% of the way to receiving a second bailout - and a third life. The last piece of the puzzle would be for EU politicians to agree on the extent of private sector bondholder involvement in any debt rollover - hopefully forthcoming next week.

"Greece lives for another day. Its underlying problems are far from resolved, however, and the view remains that ultimately we will be faced with a sovereign bankruptcy - all they've done is push this into 2012, or 2013 if they are lucky," RMB noted.

It said yesterday's Eurozone sentiment data had provided yet more evidence of the slowdown in global economic activity.

"This theme has been overshadowed by the Greek problems but will come back into focus tomorrow with the release of global PMI data."

Meanwhile Dow Jones Newswires reported that the euro rose above US$1.4500 to a three-week high in Asia Thursday after the Greek parliament's passage on Wednesday of new austerity measures appeared to make a near-term default unlikely.

Buying by overseas investors led the common currency higher, with stop-loss buying orders around $1.4450 accelerating the gains. The euro touched $1.4519, its highest since June 10.

Expectations for the European Central Bank to raise interest rates at a meeting next Thursday were also helping the euro, dealers said. Assuming Greece passed legislation later in the global day to implement the austerity bills, the euro could trend higher in the coming sessions, they said.

Dai Sato, a senior vice president of the foreign exchange division of Mizuho Corporate Bank, said the euro could climb as high as $1.4700 in the near term.

The possibility that Greece will avoid default soon is "making people optimistic in the near term, although people are pessimistic (about the Greek situation) over the longer term," Sato said.

Gains in Chinese and other regional share markets also buoyed sentiment toward risk-sensitive currencies such as the euro, dealers said.