Currencies (2 June)

The rand broke below the R6,40 to-the-dollar level for the first time since April 13 yesterday afternoon, helped by dollar sales, a stronger euro and a higher gold price.

However, the local unit came off its best levels after US Institute for Supply Management (ISM) came in stronger than expected, giving the dollar a boost.

In late afternoon, the rand was quoted at R6,4218 to the dollar from an overnight close of R6,5183. It was quoted at R7,8225 to the euro from a previous R7,9090 and at R11,7920 against sterling from Monday's R11,9470.

Initially there was talk of exporters encouraged by the euro strength, a market analyst said. Quite a lot of people were trying to pick the bottom of the rand's move stronger and they got squeezed. Stops were triggered on the downside.

However, the rand's bounce after the ISM numbers was not surprising as these were the main sources of direction going into the evening. The rand's strength at levels below R6,40 had seemed unsustainable, although it was supported by the higher gold price.

A currency trader commented that the rand had been helped by dollar sales from local exporters and offshore fund managers, as well as the bullion price.

The dollar weakened against most widely traded counterparts except the yen yesterday, as a jump in oil prices to fresh all time highs rattled currency markets.

The dollar got a short-lived boost from strong data out of the US manufacturing and construction sectors, but was quickly sold off again amid a surge in oil prices.