The rand remained well bid around the 7.70 to the dollar mark during the course of the morning on Thursday as an option barrier at 7.70 and a weak dollar aided flows.

A senior rand dealer explained that the option barrier was in place to "cheapen it up", but that if 7.70 was broken, the market could head to the 7.60 per dollar mark. He said "massive bids" were taking place around the barrier.

He added that the euro was "all over the place", with the dollar thus being keenly monitored for direction. Dow Jones Newswires reports renewed fears about Freddie Mac and Fannie Mae and a rebound in crude oil prices are both taking their toll on the dollar in Europe today.

By 12.08pm the rand was bid at 7.7120 to the dollar from a previous close of 7.7525. It was bid at 11.3981 to the euro from a previous 11.4405 and at 14.4038 against sterling from 14.4405 before.

The euro was bid at US$1.4757 from US$1.4743 overnight, while gold was quoted at $820.72 a troy ounce from $813.32 overnight.

Dow Jones Newswires reports dollar losses against the euro were also limited as the latest eurozone purchasing managers' indexes came in showing an economy still very much in contraction.

By contrast, the Philadelphia Fed survey due out of the US later in the day is expected to show an improvement.

The latest hit for the dollar came after the US Treasury failed to provide quite the reassurance that the market was seeking on the future of Freddie Mac and Fannie Mae, and both mortgage agencies share prices tumbled well over 20 percent.

Altogether they have lost about 95 percent of their value over the last year.

Although the Dow Jones Industrial Average still managed to rise 0.6 percent, concern about the financial sector in general helped to push the Nikkei index in Japan down 0.8 percent earlier on Thursday.

Bonds range bound in quiet market

Bonds remained range bound by noon on Thursday in a quiet market as traders tried to cover their short positions. A stronger rand was seen as a factor leading to the short-covering activity.

"The market is range bound and there is not too much volume in the market," a trader said.

By 11.17am the short-term government R153 bond was at 9.830 percent from its previous close of 9.790 percent. The medium-term R157 was at 9.195 percent from 9.150 percent at the previous close. The long-term R186 was bid at 8.935 percent from its previous close of 8.900 percent.

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