A softer rand spiked to above 8.00 against the dollar at its opening on Monday, triggered by a mispricing on the Tokyo futures exchange. The local currency did however, dip back below 8.00 against the greenback.

At 8.55am the rand was bid at 7.8889 to the dollar from 8.1160 at its previous close. It was bid at 11.6343 to the euro from its previous close of 11.9713 and was at 12.9673 against sterling from 13.2901.

The euro was bid at $1.4756 from $1.4734 overnight.

A local trader said: "A mispricing on the Tokyo futures exchange this morning saw the rand spike to well above 8.00 against the dollar. We have come back down to below 8.00, but 8.83-8.85 will take us back to 8.00 again."

RMB analysts John Cairns and Nema Ramkhelawan pointed to a brief freefall from the rand this morning. "Following the worst day for Wall Street in months on Friday, US small business lender CIT filed for bankruptcy over the weekend in what is one of the largest corporate failures in history. US dollar/rand spiked immediately to 8.25 as trade opened in Asia - but this was a massive overreaction and we should come into regular trade at around 7.90 this morning" they said.

"Indeed, trade up at the highs was very brief and illiquid and the scope for getting any orders filled was almost non existent. Still, the spike does show just how nervous markets are - and how the rand is the obvious victim," the analysts said.

"Now, it's all about global risk appetite. The fear really is that the global recovery will not have any legs and we will slip back into a W-shaped recession. This will ultimately be signalled by the data going into next year.

"For now the nervous markets will react strongly to any data signalling confidence and consumer intentions. As always the first week of the month is chock-a-block with data. We start with global purchasing managers indices today," RMB said.

"Mid-week sees policy announcements from the Fed, BoE and ECB. We end the week with the big one: US non-farm unemployment data. Locally also we have the reserve figures, which will probably show a very small accumulation from the Sarb in October. Finally we end with the G20 meeting over the weekend where markets will be looking for signs of disquiet from policy-makers on the USD's continued decline.

"After almost a 50-cent range on USD/rand last week, we can probably look for a 40-cent range this week (both numbers ignoring the spike to 8.25). Support is at 7.75. A test of 8.00 could come as soon as today if global data disappoints. This is slightly ironic given the R3.9bn September trade surplus reported last week," Cairns and Ramkhelawan concluded.

Dow Jones Newswires reported that the dollar recouped lost ground against the yen in Asia on Monday as US banks bought the greenback on bargain-hunting after it hit two-week lows earlier on news that a major U.S. company that finances small businesses filed for bankruptcy protection.

However, the dollar may remain on a falling trend in the coming days, traders said.

US media reported on Monday morning in Asia that the board of CIT Group Inc, a lender to a multitude of small and mid sized businesses, approved a decision to seek a Chapter 11 protection, a move that could eventually wipe out a $2.3-billion public fund extended late last year by the administration of George W. Bush to rescue the company.

The news added to the grim outlook for the world's biggest economy, prompting market participants to unload the greenback.

Bonds were several basis points weaker in early trade on Monday on the back of a weaker rand.

By 10.00am, the short-term government R154 bond was bid at 7.185 from a previous close of 7.090 percent. The medium-term R157 was at 8.445 percent from 8.410 percent, while the long-term R186 was bid at 9.045 percent from 9.000 percent.

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