Currencies (18.6.04)

After trading stronger for most of the day, the rand weakened in afternoon trade yesterday on the back of offshore demand for dollars.

However, currency traders expected the local unit to remain range bound for the rest of the day.

In the late afternoon, the rand was quoted at R6,3526 to the dollar from an overnight close of R6,5298 on Wednesday and R6,4625 on Tuesday. It was quoted at R7,8463 to the euro from a previous R7,8244 and at R11,9620 against sterling compared with Wednesday's R11,9300.

A currency trader said that the rand had weakened on the back of demand for dollars out of London. While he was unsure what was creating this demand, he said that it could be related to an equity deal.

The rand was trading below R6,50 all day, then London started buying (dollars) and it broke above R6,50 . The trader said that he expected the rand to trade in a R6,48 to R6,58 range for the remainder of the day.

The rand weakened on Wednesday, when local markets were closed for Youth Day, on the back of a softer euro. However, it recouped its losses yesterday morning.

The dollar traded lower against major currencies yesterday, receiving little support from a string of robust US economic reports.

Strong US data have recently had little positive effect on the dollar, which has already priced in a solid economic recovery and action by the Fed to raise interest rates at its June meeting.