Some demand for the rand from UK banks saw the local currency firm by almost two percent on Tuesday.

By 3.50pm the rand was bid at 7.6532 to the dollar from a previous close of 7.7650 and an intraday best level of 7.6100. It was bid at 12.1898 to the euro from a previous 12.3313 and at 15.2509 against sterling from 15.3537 before.

The euro was bid at US$1.5939 from $1.5905 overnight, while gold was quoted at $919.33 a troy ounce from $915.85 overnight.

"Trade is very order driven at the moment. We're seeing a bit of buying of the rand by UK banks and the market is also fairly illiquid which has seen the local currency strengthen a bit," a local currency trader said.

Dow Jones Newswires reports that the dollar fell within a fraction of a cent of its historical low against the euro overnight, after European Central Bank council member Yves Mersch suggested the ECB could hike interest rates.

The euro rose to $1.5971, but has since fallen back to its day earlier late-afternoon range.

Markets are awaiting the release of US existing home sales data for March at 10am EDT, which is expected to show a 2.0 percent decline after rising by 2.9 percent in February.

Analysts note that a sign of decreasing inventories is necessary to indicate a sustainable US recovery.

Rand helps, but bonds hesitant pre-CPI

Bonds improved marginally during the afternoon on Tuesday thanks to the rand, but a dealer noted that the move was slower than could have been expected given the extent of the rand's move.

By 4.29pm the short-term government R153 bond was at 9.995 percent from 10.000 percent at its previous close, while the medium-term R157 was at 9.250 percent from 9.270 percent at its previous close. The longer-term R186 bond was bid at 9.095 percent from its previous close of 9.100 percent.

I-Net Bridge