The rand remained range bound against the dollar in early trade on Friday, but was eyeing the 12 rand per euro level as the European single currency gave up ground to the greenback.

By 08.25am the rand was bid at 7.7211 to the dollar from a previous close of 7.6830. It was bid at 12.0857 to the euro from a previous 12.0520 and at 15.2330 against sterling from 15.1704 before.

The euro was bid at $1.5642 from $1.5681 overnight, while gold was quoted at $887.75 a troy ounce from $888.00/oz overnight.

RMB analysts said in their morning report that once again there has been vicious swings in the USD/ZAR. Pressure yesterday was initially to the upside as the market again took the poor inflation data as negative, but the rand firmed to 7.66 following a good Wall Street performance overnight.

"The Financial Times is also reporting this morning that Bharti Aitel, India's top mobile phone company, may make a bid for MTN, although this has apparently been denied. This could keep the pressure towards the 7.60 level today and, even while the lack of international or local data today might constrain somewhat, expect wild swings within 7.60—7.75 to continue," they said.

They pointed out that the EUR/ZAR is pushing down at the 12.00 level as international policymakers verbally attempt to stop the EUR's relentless rise against the USD and after weak German data yesterday.

The trend is towards a break lower on EUR/ZAR and this could help drag USD/ZAR through the 7.60 level, RMB said.

Bonds flat; consolidate after battering

Bonds were flat in early trade on Friday as they searched for breathing space after the battering they have received over the past two days. Sentiment remains bearish due to expectations of further rate increases, possibly even beyond June.

By 8.48am the short-term government R153 bond was at 10.250 percent, unchanged from its previous close, while the medium-term R157 was at 9.440 percent from 9.435 percent at its previous close. The longer-term R186 bond was bid at 9.285 percent from its previous close of 9.265 percent.

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