The South African rand was range-bound in midday trade on Wednesday, shrugging off slightly better than expected consumer inflation data and keeping an eye on the dollar, which faces mounting pressure.
At 11.55 local time the rand was bid at R6.9601/USD from R6.9340/USD at the previous close.
It was bid at R9.4592/€ from R9.4281/€ before and at R10.9929/£ from R10.9680/£ at its previous close.
The euro was bid at USD1.3592 from USD1.3569 overnight.
A trader said the rand was struck in a range of R6.94/USD to R6.98/USD.
"There is a possibility that the rand may touch 6.90 within the next couple of days, with the dollar weak across the board," the trader said, noting that the local unit shrugged off the CPI data.
The increase in South Africa's CPI, which is used by the South African Reserve Bank (SARB) for its inflation target, was 3.5 percent year-on-year (y/y) in August from 3.7 percent y/y in July, Statistics South Africa (Stats SA) said on Wednesday.
The CPI was expected to have remained at 3.7 percent y/y in August, according to a survey of leading economists by I-Net Bridge. Forecasts among the eight economists ranged from 3.5 percent to 3.8 percent.
RMB said the wholesale sell-off in the US dollar has driven US dollar/rand lower, down to 6.95 yesterday, as euro/US dollar broke 1.3500.
"Talk is now for 1.3700 on the latter and, if this plays out, the drive lower on US dollar/rand will remain relentless."
"Note that this is a US dollar story. We certainly do have rand positives; Wesizwe Platinum is in talks for US$900m of funding from China, taking the probable net inflows from the proposed FDI deals in the past few months to over US$8bn," the analysts said.
RMB also pointed to next week's release of the September reserves data to see how aggressively the SARB has responded to the break of 7.20 and 7.00.
Dow Jones Newswires reported that continued speculation about more monetary easing in the US kept the dollar on the back foot on Wednesday.
However, most of its losses were limited. Concerns about the euro zone's sovereign debt problems kept a lid on the euro's gains against the US currency and continued fears about Bank of Japan intervention kept the dollar from falling too close to Y83.00. - I-Net Bridge