Johannesburg - The rand advanced to a new three-year high against a broadly weaker dollar on Tuesday and was also boosted by higher metal prices.
The rand traded at R6.6750/$ in afternoon trade, which was 1% firmer than Monday's New York close of R6.7415/$. It touched R6.6725/$, its strongest since December 2007.
Market analysts Tradition Analytics said earlier on Tuesday in a note that the rand could dip below R6.70/$, firming along with other emerging market currencies.
"The fact that commodity prices have ramped even higher suggests that the rand will continue to benefit from the current weakness in the dollar," it said.
Also supporting the rand is news that South Africa has been invited to join the Bric group of major emerging economies that are seen to have global clout due to their fast pace of growth. The group includes Brazil, Russia, India and China.
Against the euro the rand earlier on Tuesday stood at R8.8080, not far from the four-year high of R8.7475 it hit last week.
Higher inflows into the bond market have boosted the rand in the past 18 months, and it has gained about 30% since the beginning of 2009.
Those inflows have pushed bond yields sharply lower across the curve. Expectations that domestic interest rates may fall further in the first quarter of 2011 to boost a fragile recovery are also supporting bonds.
While the unit remained strong, it came off its fresh three-year high in late afternoon trade.
"There have been exporters in the market since this morning," a local currency trader said.