Currencies (23.6.04)

The rand was stuck in a arrow range in late afternoon trade yesterday, as the market paused for breath after the local unit's rally over the previous two trading days.

Currency traders saw the rand, which on Monday afternoon broke below the R6,30-to-the-dollar-level for the first time since mid-April, extending its gains in the coming days.

In late afternoon, the rand was trading at R6,2971 to the dollar from an overnight close of R6,3908 on Friday and R6,5213 on Thursday. It was quoted at R7,6077 to the euro from a previous R7,6512 and at R11,4720 against sterling from Monday's R11,5730.

It was very quiet yesterday. The rand is consolidating near its lows (best levels) and R6,29 to R6,3350 has been the range.

It needs to break above R6,38 or below R6,28 to give it direction, but any move above R6,38 is likely to be short-lived and the rand is looking to test lower (firmer) in the next couple of days, a currency trader said.

He also said that the market was nervous and stop losses were building below the R6,28-to-the-dollar level. These were increasing in number every time the rand failed to break this level. Once the rand breaks through R6,28, there is talk of it testing R6,19. It could be quite a quick move.

The dollar posted gains across the board yesterday, including a sharp rebound against the yen, as volatile trading conditions persist ahead of next week's Federal Reserve monetary policy meeting.

With the Federal Open Market Committee widely expected to raise its benchmark rate by 25 basis points when it meets on June 29 and 30 and a relatively light summer economic calendar this week, many investors have moved tot he sidelines.

Thin liquidity levels have helped to exaggerate market moves.