Johannesburg - The rand firmed against the dollar on Thursday on growing expectations of a breakthrough in negotiations that could end a strike in South African gold mines.
South Africa's currency strengthened for a second straight session to 10.2235 at 1545 GMT from previous close of 10.2450 in New York.
An agreement at two junior gold miners on Wednesday raised hopes that the National Union of Mineworkers, on a wage strike since Tuesday, could soon reach an agreement with the management of bigger miners, ending the strike much sooner than expected.
But dealers were cautious ahead of the release on Friday of US non-farm payrolls data, which could reinforce the view that the Federal Reserve will announce a start to the withdrawal of its monetary stimulus programme at its September rate-setting meeting.
“The rand's vulnerability to external sentiment will remain a big concern for the South African Reserve Bank, where the pass through to inflation remains a risk and may only prolong labour unrest, while keeping consumer sentiment dampened,” said Anisha Arora, emerging market analyst for 4cast.
The rand has dropped 22 percent against the dollar since the start of the year, losses that were recently compounded by investors heavily selling emerging markets ahead of the 'Fed tapering' and negative sentiment fueled by the labour strikes.
The BRICS groups urged the G20 to minimise the spill-over effect of monetary policy decisions, while announcing each country's contribution to a joint $100 billion reserve fund to fight the destabilisation of their currencies by the expected US stimulus withdrawal.
Government bonds were slightly weaker, with the 2026 paper up 4 basis points to 8.565 percent and the 2015 note 2.5 basis points higher at 6.46 percent.
Dealers were holding out ahead of Friday's US jobs number.
“That's going to be the big driver. Whatever effect the non-farm number has on US tenure rates, the same effect will come into our bonds,” Mark Southworth, a bond trader with Citibank said. - Reuters