Johannesburg - South Africa's rand was weaker against the dollar on Wednesday, with investors on a knife's edge over a possible sovereign credit downgrade at the end of the week.

The market is also bracing for a likely year-on-year contraction in April mining output due to a five month old platinum strike that has hit the local operations of the world's three largest producers of the precious metal.

The rand was trading at 10.7555 to the dollar by 17:24 SA time, down 0.47 percent from its Tuesday close in New York.

Fitch and Standard & Poor's will release their latest ratings reviews on Africa's most developed economy on Friday, and analysts expect at least one downgrade given anaemic growth and the threat of more labour unrest as annual wage negotiations get underway.

“The downgrade won't be much of a surprise, but in the long term it should increase the price of capital and demand a higher a risk premium,” Investec trader David Gracey said.

Emerging market currencies like the rand were also under pressure as an insurgency in Iraq fanned a new wave of global risk aversion, Gracey added.

South Africa government bonds extended the previous day's losses after a poorly subscribed weekly government auction, with yields, which move inversely to the price, rising to six week highs.

The 2026 bond gained 9.5 basis points to 8.46 percent, while the shorter dated 2015 bond accumulated 7 basis points to 6.805 percent. - Reuters