Johannesburg - South Africa's rand softened against the dollar on Friday after the revenue service reported a wider-than-expected trade deficit for January, pointing to pressure on the current account in the first quarter of the year.

The trade balance swung into a deficit of 17.06 billion rand ($1.59 billion) in January, about double what economists had expected, after a 2.78 billion rand surplus in December.

The rand weakened against the dollar after the release, hitting a session low of 10.7500 against the dollar before pushing back slightly to 10.7350 by 18:15 SA time, down 0.4 percent from Thursday's close.

The deterioration in the trade number was partly a result of labour market disruptions in the mining and manufacturing sectors which had “severely undermined” South African exports, said Stanlib analyst Kevin Lings.

“Nevertheless, systematically higher world growth, coupled with sustained rand weakness and some improvement in labour market conditions ... should help lift South Africa's export performance this year and into 2015,” he added.

Government bond yields edged lower as foreign appetite returned to the market after an investor-friendly budget this week that sought to keep public spending in check.

Yields for the 2026 and 2015 bond, the market benchmarks, each dipped 2 basis points to 8.555 percent and 7.12 percent respectively. - Reuters