A combination of high oil prices, falling stock markets and rising risk aversion saw the rand remaining under pressure in late trade on Tuesday.

A decline in both the local and the UK PMI figures for June had also not helped the local currency, traders said.

By 3.52pm the rand was bid at 7.9135 to the dollar from a previous close of 7.8447. It was bid at 12.4812 to the euro from a previous 12.3544 and at 15.7746 against sterling from 15.6224 before.

The euro was bid at US$1.5773 from US$1.5755 overnight, while gold was quoted at $938.20 a troy ounce from $926.05 overnight.

"Oil prices are up, equities are down which have placed some pressure on the rand and the PMI figures didn't help. The market is also very thin and there's a lot of massaging of half-year portfolios going on – a lot of squaring of positions. But the market is still very flow-driven. So it's a case of the same storm, different week," a local currency trader said.

Data released locally on Tuesday showed that manufacturing conditions deteriorated further in June, with the seasonally adjusted Investec Purchasing Managers Index declining 5.3 index points to 43.8 from 49.1 in May.

"A sharp slowdown in business activity contributed significantly to the decline in the overall index. The seasonally adjusted business activity index fell to 38.7, lower than the readings posted in 2003 when the sector was in recession," said André Roux, head of fixed income at Investec Asset Management.

Furthermore, demand conditions continued to weaken and the seasonally adjusted index of new sales orders weakened to 43, its lowest level in five years. "While demand is slowing both domestically and abroad, the accelerated decline in new sales orders may also be revealing the relative un-competitiveness of local producers," Roux said.

The UK's manufacturing sector also contracted sharply in June, as activity levels wilted to their lowest levels since December 2001, according to Dow Jones Newswires.

Data from economic research firm Markit Tuesday showed that the Purchasing Managers Index for the UK's manufacturing sector dropped to a reading of 45.8 in June from a downwardly revised 49.5 in May.

That outcome was much weaker than expected, with economists surveyed by Dow Jones Newswires last week estimating that the PMI would fall to 49.8.

Bonds stay soft on PMI, rand

Bonds weakened substantially on Tuesday and were between 15.5 and 17 basis points weaker in late afternoon trade. Traders cited various factors, including a weaker rand, rising risk aversion and a disappointing PMI figure for June for the weakness.

By 3.45pm the short-term government R153 bond was at 11.880 percent from its previous close of 11.750 percent, while the medium-term R157 was at 10.910 percent from a previous 10.715 percent. The long-term R186 was bid at 10.675 percent from a previous 10.480 percent.

I-Net Bridge