Johannesburg - The rand firmed against the dollar, supported by bearish dollar sentiment on Thursday, while bonds steadied with the market digesting an interim budget presented in the previous session.
At 18:02 South African time, the rand was up 0.3 percent at 9.7725/dollar, off a 9.8000 close in New York on Wednesday.
The dollar is taking a hit from investors' expectations that the struggling US economy will see the US Federal Reserve stay put on its monetary stimulus programme until next year.
Analysts said the local currency would look offshore for direction in the next few days while the local data calendar remains bare until Tuesday.
“Into the weekend we could expect the rand to closely track core markets with nothing on the local calendar to inspire. The short term trend has seen dollar/rand tracking the dollar index almost tick to tick,” said Anisha Arora, an analyst at 4Cast.
The next data out of South Africa will be on Tuesday, when jobless numbers and private sector borrowing figures will be released.
Yields on government bonds were nearly unchanged at 7.765 percent on the 2026 issue on Thursday, pulling back from Wednesday's rally after Finance Minister Pravin Gordhan announced a smaller-than-expected budget deficit forecast at his annual budget review.
However dealers said they were not surprised by Gordhan's upbeat tone, and still expected increased issuance from the next fiscal year, and therefore a steepening of the yield curve.
Risks remain because of South Africa's worrying budget and current-account deficits, which make the rand vulnerable to external shocks and sudden reversals of capital flows.
“Even though the risk-on trade is there, we are the least desirable of the emerging markets because of our twin deficits,” a local dealer said. - Reuters