The rand remained on the front foot in noon trade on Wednesday, buoyed by positive sentiment with the euro and foreign investment the main drivers.

By 12pm the rand was bid at 7.6120 to the dollar from a previous close of 7.5820. It was bid at 12.1700 to the euro from a previous 12.2075 and at 15.2019 against sterling from 15.2001 before.

The euro was bid at US$1.5955 from $1.5996 overnight, while gold was quoted at $915.75 a troy ounce from $916.25 overnight.

"The rand remains firmer but within ranges. There is scope for it firm even more," a local currency trader said.

He added that the local currency had shrugged off consumer inflation data (CPIX) for March which was worse than expected, indicating more interest rate hikes could be in the pipeline.

"CPIX is not really a short-term driver for the rand," he pointed out.

However, Razia Khan, regional head of research on Africa at Standard Chartered Bank, said the recent recovery in the rand would help to "provide some (albeit moderate) counter impetus to the inflation trend, but with no particular reassurance that this can be sustained if global risk appetite deteriorates again, South Africa still faces a difficult time ahead".

RMB analysts said in their morning report that there was no obvious driver of the move stronger yesterday, although EUR/USD's later move to test 1.6000 on hints, later denied, that the ECB is considering hiking rates, offers some post-event justification.

"We have also had a string of positive news on the FDI front, with three deals totalling US$492m announced in the last three business days, the latest being VVP's US$160m purchase of a stake in Highveld Steel and Vanadium," they added.

Whatever the driver, the analysts say sentiment is still positive towards the rand.

Support is now evident in the 7.60/63 area, then at 7.56, 7.48 and 7.39.

"Further downside shouldn't be ruled out, especially if EUR/USD manages to break 1.6000."

'Terrible' CPIX pushes yields weaker

Bond yields weakened quickly and sharply by midday on Wednesday in line with what a bond portfolio manager described as a "terrible, shocking CPIX number".

By 11.58am the short-term government R153 bond was at 10.105 percent from 10.000 percent at its previous close, while the medium-term R157 was bid at 9.340 percent from 9.260 percent at its previous close. The longer-term R186 bond was bid at 9.165 percent from its previous close of 9.080 percent.

I-Net Bridge