Johannesburg - The rand was largely flat against the dollar in early Thursday trade but could extend overnight losses in the wake of comments from the US central bank which heightened expectations of policy tightening in the world's largest economy.
By 0651 GMT the local unit was trading at 10.8695 to the dollar, little changed from Wednesday's close at 10.8680 in New York.
The local currency had rallied to 10.6810 on Wednesday, but retreated alongside other major currencies after comments from Federal Reserve head Janet Yellen prompted investors to bring forward their US interest rate hike expectations, boosting the dollar.
“Yesterday's price action served as a reminder of just how vulnerable the rand still is to the prospect of tighter US monetary policy due to South Africa's large external funding requirements,” Barclays Africa said in a note.
“Hence, if today's weekly (US) jobless claims data proves better than expected, then we think the rand is likely to continue losing ground into the local long weekend.”
South African financial markets will be closed for a public holiday on Friday.
Government bonds weakened in early trade, with the yield for the 2026 bond adding 6.5 basis points to 8.61 percent. The 2015 instrument at the shorter end of the curve climbed 9.5 basis points to 7.015 percent.