The rand remained moderately weaker but was off the session's worst levels in late trade on Tuesday as the euro soared to its highest level against the dollar in more than a year.

At 3.45pm the rand was bid at 7.3709 to the dollar from 7.3225 at its previous close. It was bid at 10.9027 to the euro from its previous close of 10.8110 and was at 11.6665 against sterling from 11.5477.

The euro was bid at US$1.4813 from US$1.4778 overnight.

"There's not really much to tell at the moment. The rand is in the hands of the euro. The local currency tried to get below the key level of 7.29- 7.30 but couldn't hold and the euro has also come off a bit again from the day's best level," a local currency trader said.

"We are well within a range of about 7.30-7.54, and I think we will continue in this range for a while," he said.

RMB analysts John Cairns and Nema Ramkhelawan said earlier that the brief surge in the gold price to unprecedented highs and the loftier oil price also gave impetus to commodity currencies, notably the New Zealand dollar and the rand.

"The ZAR, however, strengthened on global developments and traded near- 14-month highs but could not break the elusive USD/ZAR7.30 barrier. It appears as though the unit encounters considerable resistance at this level, which is suggestive of either SARB purchases or considerable interest by importers at these rates. We suspect that the ZAR will continue to meander in a minor range and remain content below 7.40 over the next few days," said the analysts.

"Nevertheless, the ZAR will continue to be led by movements in the gold price and draw support from a stronger EUR/USD," they added.

Dow Jones Newswire reports that the euro hit its highest levels against the dollar since September 2008 in early New York trading Tuesday, as investors chase higher yields despite some discouraging economic reports from the euro zone.

Worse-than-expected overnight euro-zone data failed to halt the common currency's march toward $1.50, a level that is a target for traders.

The allure of higher returns in the euro, the Australian dollar and other better-yielding currencies, fuelled by positive third-quarter corporate earnings, led investors to shake off the disappointing German data, said Stuart Bennett, senior currency strategist at Calyon in London.

The ZEW economic expectations index for Germany fell to 56 from 57.7 in September; economists had forecast the expectations index to be unchanged. The current German economic conditions index remained "very poor," the ZEW institute said, with a modest increase of 1.8 points to a level of -72.2, a reading not as good as economists expected.

"If anything, the numbers we have from Europe were a downside surprise, which should have raised questions about the pace and shape of euro-zone recovery, but as it happened, the market is focused on dollar weakness and is searching for yield," Bennett said.

Bonds chug along in negative vein

Bonds were on the back foot on Tuesday after a poor weekly auction sent buyers packing. Better offers entered the fray soon after the auction results were announced, but there had been a build-up to this outcome from last week already as appetite has clearly started to wane for the glut of paper flooding the market.

By 3.51pm the short-term government R154 bond was bid at 7.600 percent from a previous close of 7.470 percent. The medium-term R157 was at 8.510 percent from 8.420 percent, while the long-term R186 was bid at 9.105 percent from 9.010 percent.

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