The rand was little changed in afternoon trade on Tuesday as it remained confined to its recent range as it took its cue from global markets and weaker emerging market currencies.

At 3.35pm the rand was bid at 10.2638 to the dollar from an overnight close of 10.1937. It was bid at 12.9757 to the euro from a previous 12.8703 and at 15.3952 against sterling from 15.2390 before.

The euro was bid at US$1.2633 from US$1.2632 overnight.

A local currency trader said that stocks are having a bad day and that was weighing on the local currency.

"We are a bit softer, but still in ranges. It needs to get above 10.40 per dollar to weaken further," he noted.

Asian shares were weaker following a 2.6 percent decline in the Dow overnight, with the Nikkei closing off 2.3 percent and the Hang Seng down 2.9 percent. In London the FTSE 100 is 0.86 percent weaker while the JSE's all share index is 2.2 percent in the red.

Another trader added that emerging market currencies were also weaker and that was playing a role.

RMB analysts hade expected the rand to trade in a 10.00-10.30 range on the day.

The US dollar was little changed after the release of PPI data.

Dow Jones Newswires reports US producer prices posted a record drop last month, sliding for a third straight month as raw material and energy prices tumbled.

While core prices remained higher, price pressures deeper in the production pipeline continued to decline sharply. Raw materials registered another record drop in prices, while energy prices posted the biggest decline in over 22 years.

The report suggests the weakening economy and falling energy prices should continue to drag down inflation in coming months, which should allow the Federal Reserve to keep its focus on spurring growth and containing the financial crisis.

The producer price index for finished goods slid 2.8 percent on a seasonally adjusted basis in October, topping the previous record drop of 1.6 percent in October 2001, the Labour Department said on Tuesday. The index fell 0.4 percent in September.

The drop in October was also substantially more than the 1.8 percent decline predicted by economists in a Dow Jones Newswires survey.

Curve dis-inverts on inflation hopes

The short end of South Africa's bond yield curve received a fillip on Tuesday after comments from the National Treasury reportedly raised hopes of lower inflation and interest rates going forward. However, a weak rand weighed on the middle and longer areas of the curve.

By 3.55pm the short-term government R153 bond was at 9.040 percent from its previous close of 9.115 percent. The medium-term R157 was at 8.720 percent from 8.710 percent at Monday's close and the long-term R186 was bid at 8.475 percent from 8.440 percent before.

I-Net Bridge