Johannesburg - South Africa's rand recovered some of its footing against the dollar on Friday after plumbing five-year lows earlier in the week, but a dim economic outlook points to further losses in the short term.

By 17:28 SA time the local currency was trading at 10.8375 to the greenback, a 0.56 percent gain over Thursday's close in New York.

This was a significant pull-back from the previous day's trough of 10.9620, the weakest the rand has been since October 2008.

Government bonds also nudged higher, with yields on the heavily traded instruments due in 2026 and 2015 dipping one basis point each to 8.335 percent and 6.22 percent respectively.

With no market-moving economic data released out of South Africa on Friday, the rand took its cue mainly from global market trends, where the dollar's recent rally lost some steam after a mixed bag of US economic data.

Another boost from the local unit came from news that South Africa's National Union of Mineworkers had accepted a wage increase offer from mid-tier platinum producer Northam Platinum, likely ending a 75-day strike by more than 7,000 miners.

The rand however remains hostage to yawning shortfalls on South Africa's budget and current accounts, which have earned it a place among “fragile” emerging market currencies that tend to suffer heavy losses during bouts of global risk aversion.

A series of strikes in the manufacturing and mining sector weighed on investor sentiment last year, helping weaken the rand by a about 25 percent against the greenback.

The threat of more wage-related job boycotts still looms in 2014, adding pressure on an economy struggling to grow above 2 percent.

“The rand remains plagued by a host of issues ... and the topside surprise on November retail sales seen earlier in the week will likely do little to offset concern around weak mining and manufacturing sector growth and further strike action,” analysts at Tradition Analytics said in a note.

The South African Reserve Bank has singled out the weaker rand as a major risk to the inflation outlook, and will likely keep rates unchanged at its first policy meeting of the year later this month, despite signs that the economy requires further monetary loosening. - Reuters