Rand weaker as greenback recovers

Johannesburg - The rand was weaker in quiet midday trade on Monday as the dollar continued its recovery.

At 11:43 local time the rand was bid at 6.8859 from 6.8250 at its previous close. It was bid at 9.0493 to the euro from 8.9974 before and at 10.6901 against sterling from 10.5955 at its previous close.

The euro was bid at US$1.3156 from US$1.3162.

"The rand looks like it has the potential to weaken further at this point if the euro weakens and we see the range for the rest of the day for dollar rand at 6.84 to 6.94," a local currency trader said.

Dow Jones Newswires reported that China's yuan fell significantly against the U.S. dollar late Monday due to a higher dollar-yuan central parity rate and demand for the safe-haven U.S. unit amid the tensions on the Korean Peninsula.

"Dollar demand from banks' corporate clients was quite heavy this morning, which also drew a wave of dollar demand from bank traders betting on a higher dollar-yuan intraday," said a Shanghai-based trader at an Asian bank.

Meanwhile, tension on the Korean Peninsula also supported demand for the U.S. currency.

South Korea conducted an artillery test at a marine outpost on a border island Monday, in defiance of North Korean threats of attack as it seeks to preserve its control of waters considered its territory since the Korean War in the 1950s.

"The dollar is quite strong, likely due to concerns over tension on the Korean Peninsula," said a Shanghai-based trader at a Japanese bank.

"But we think the dollar-yuan is a bit too high and some trading desks may be starting to build dollar short positions at the current levels."