A five rand coin.

Johannesburg - South Africa's rand softened against the dollar on Friday, losing ground after a five-day rally put it in shooting distance of the 10.5 mark, a level not seen since the end of last month.

The currency reversed most of the gains made in the previous two sessions, slipping 0.54 percent to 10.6045 per dollar by 17:25 SA time, after closing at 10.5480 in New York.

The rand had raced to a two-week high against the dollar in the previous session, buoyed by a rise in US jobless claims as well as renewed appetite for high-yielding emerging markets.

US producer prices and industrial production for July both rose marginally, the numbers shedding little light on whether the US Federal Reserve would end its massive bond-buying programme earlier than the expected second quarter of 2015.

Government bonds took a knock as well, with yields on both benchmarks edging higher.

The yield on the paper maturing next year ticked up 3.5 basis points to 6.615 percent, while the yield on the longer-dated paper due in 2026 edged up 4 basis points to 8.27 percent.

Market watchers expect the currency to remain within a narrow recent range until the release of domestic consumer inflation figures next Wednesday.

“US data was more or less in line, and bonds traded weaker, following the rand down,” said Marten Banninga, a bond trader at World Wide Capital Securities.

“CPI is the biggest thing in the South African context at the moment so people will definitely be taking a close look at what happens there.” - Reuters