The rand remained range bound against the dollar in noon trade on Friday but was trading below the 12 rand level against the euro as the European single currency remained under pressure against the greenback.

By 12.05pm the rand was bid at 7.6621 to the dollar from a previous close of 7.6830. It was bid at 11.9543 to the euro from a previous 12.0520 and at 15.2187 against sterling from 15.1704 before.

The euro was bid at US$1.5617 from $1.5681 overnight, while gold was quoted at $885.45 a troy ounce from $888.00 overnight.

"The rand is still very rangy. The rand-euro is the only real driver at the moment," a local currency trader said.

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.

Dow Jones Newswires reports that the dollar is mostly higher in Europe Friday, boosted by a fresh wave of optimism about the US economy.

Shifting rate expectations helped the dollar to rally Thursday, with a Wall Street Journal article suggesting that the Federal Reserve will pause to gauge the effect of its rate cuts after another 25-basis-point cut next week.

Renewed hopes that the worst of the credit crisis may be over and improved risk appetite have provided the impetus for the greenback's move higher, with softening crude oil prices also lending some support.

"The credit shock has probably passed the worst at least according to the moves in various measures of market stress including Calyon's own Risk Aversion Barometer as well as various credit indicators," said analysts at Calyon.

Bonds firm on short covering, rand

Bonds fought back during the morning on Friday and were firmly on the front foot thanks to short covering brought about by a stronger rand.

However, a bond portfolio manager said despite the move on the rand, he was not sure the weaker bias was over.

By 11.52am the short-term government R153 bond was at 10.160 percent from its previous close of 10.250 percent, while the medium-term R157 was at 9.360 percent from 9.435 percent at its previous close. The longer-term R186 bond was at 9.220 percent from its previous close of 9.265 percent.

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