Johannesburg - South Africa's rand steadied against the dollar during a muted trading session on Monday in which the local currency oscillated between firm and weak levels as it tracked moves in developed markets.

The rand traded at 10.6590 to the dollar at 17:38 SA time, slightly weaker from its 10.6525 close in New York on Friday.

Analysts expect the currency to come under pressure as worries around the Russia-Ukraine crisis drive demand for safe-haven assets such as the dollar, and as weak domestic economic fundamentals encourage rand bears.

Government bonds also ended slightly weaker as the geopolitical tensions drove investors to stay cautious.

Data from the Johannesburg stock exchange showed offshore investors continued to offload domestic debt last week, selling 2.7 billion rand in bonds, after selling the same amount the previous week.

The yield on the benchmark 2026 bond closed one basis point higher at 8.31 percent in Monday's session.

“Notwithstanding the aggressive to-and-fro action in dollar/rand and the R186 bond, we believe that the underlying tone remains bearish for the rand and local bond market,” Barclays Africa said in a market note.

“We continue to recommend adding to short rand positions at 10.55-10.60 for a push above 10.86 in the weeks ahead.”

Investors are bracing for slowing retail sales when June data is released on Wednesday, and a continued fall in mining output on Thursday, a sector that drove the economy to contract in the first quarter.

The data will be keenly watched as the last major output numbers before second quarter GDP is released. - Reuters