The rand was steady in early trade on Wednesday, with attention focused on global markets and, in particular, the European Central Bank decision on interest rates on Thursday.

By 08.25am the rand was bid at 7.8500 to the dollar from a previous close of 7.8726. It was bid at 12.4311 to the euro from a previous 12.4443 and at 15.6994 against sterling from 15.6991 before.

The euro was bid at $1.5822 from $1.5793 overnight, while gold was quoted at $941.80 a troy ounce from $940.70/oz overnight.

RMB analysts said in their morning report for this week the European markets are dominating.

"International market turmoil yesterday was driven by fears over rising EU inflation and all eyes are on tomorrow's ECB rate meeting. Conditions will remain tough and we should look for volatility ahead. For now though, after initially tracking the EU markets lower US equities at least managed to bounce back and this should ease some of the pressure in Europe today," they said.

For the rand, the prospect of rising EU rates even while the Fed remains on hold is helping through a higher EUR/USD.

"The speculation over the potential collapse of the Reliance/MTN deal meanwhile should be seen as ZAR positive. The current proposed deal would just involve a share swap and so generate no actual inflows but if the deal fails then it opens up the way for other suitors and another deal structure," RMB added.

They expect the rand to stabilise in a 7.82 — 7.92 range.

Event risk today is focussed on local consumer confidence and vehicle sales data, US factory orders and whatever ECB chief Trichet hints on rates.

I-Net Bridge