The rand was steady against the dollar in morning trade on Tuesday, but weaker against the euro.
"We see the rand dollar range at 6.82 to 6.86 to start," a rand trader said.
"I don't see the 5 percent increase in limits on offshore investments [announced Monday] having an effect on the rand ... I don't see investors rushing off to place their money at zero percent interest overseas ... the increase is merely part of the process of upping the offshore investment limit," the trader added.
At 8.32am local time the rand was bid at 6.8241 from 6.8159 at its previous close. It was bid at 9.1326 to the euro from 9.1450 before and at 10.8092 against sterling from 10.8219 at its previous close.
The euro was bid at US$1.3395 from US$1.3394.
RMB Currency analysts said in their morning report that the increase in prudential limits on offshore investments by institutional investors should come into effect in the next few days.
"This is serious stuff, past relaxations notably in the 1990s generated significant capital outflows.
"The effect this time around will be more limited since not all funds will be at existing limits and changes will be made to the way inward listed shares are treated."
Furthermore, part of the industry 'retirement funds' would still be restricted in increasing their offshore holdings until proposed changes to Regulation 28 of the Pension Funds Act are promulgated, RMB added.
"Overall, this is a significant step and in our view the most pro-active action that the authorities could take to ease some pressure on the ZAR.
"In fact, they could have got rid of exchange control in its entirety but baby steps it is."
RMB said the news had come in late on Monday "so it's probable that the market hasn't yet adjusted to it and as such, we could see a minor sell-off this morning."
RMB noted that the rand was clearly still biased for strength though .
"The downside move meanwhile is assisted by some generalised global USD weakness on the back of nothing much in particular."
Dow Jones news wires reported that the dollar edged up against the yen in Asia Tuesday as Japan importers and short-term investors scooped up the greenback after it fell overnight.
Further gains would likely be limited as investors hesitate to make any major bets before the outcome of the Federal Reserve's policy-making Open Market Committee later in the global day, dealers said.
But if the FOMC meeting does not lead to more downward pressure on Treasury yields, which have climbed in recent weeks, the greenback could continue rising against its Japanese counterpart, analysts said.
Bonds firm ahead of auction, CPI
Bonds were firmer in early trade on Tuesday ahead of the weekly government bond auction and the release of November's CPI data by Stats SA at 11.30am.
The National Treasury will auction R1.5-billion worth of R204 bonds and R600-million worth of R208 bonds at 11am.
By 8.45am the benchmark R157 bond was at 7.350 percent from its previous close of 7.405 percent, while the R207 was bid at 8.195 percent and offered at 8.165 percent from 8.235 percent at its previous close. The R186 was bid at 8.385 percent and offered at 8.355 percent after closing at 8.430.
