Johannesburg - Government bonds and the rand weakened on Wednesday as US jobs data fuelled speculation the Federal Reserve could soon start reducing its asset purchases, triggering a sell-off in risky assets.
The rand earlier flirted with a three-week low of R10.4375/$ and was at R10.4180/$ by 15:43 GMT, down 0.87% from Tuesday's closing level in New York.
Government bonds were also sold on the day, pushing the yield on the heavily traded issue due in 2026 up 6.5 basis points to 8.46% and that for the 2015 paper 7 basis points higher to 6.31%.
The rand move was largely a reflection of a stronger dollar after data showed US private sector hiring rose by the most in a year in November.
"A couple of the Fed members have hinted that if the jobs data is good - and today's was far better than the market anticipated - then tapering would be on the table at the December Fed meeting," said Steve Arnold, a bond trader at Investec.
"So you're finding there's a global risk-off taking place, guys are starting to sell riskier assets in anticipation of tapering beginning."
The rand's decline on Wednesday extended the previous day's losses after the Reserve Bank said South Africa's current account deficit - a longstanding weak spot for the rand - widened more than expected to 6.8% of GDP in the third quarter.
The current account, coupled with a budget deficit which has persisted at around 5% of GDP since a 2009 recession, makes the rand particularly vulnerable during bouts of global risk aversion.
The rand earlier flirted with a three-week low of R10.4375/$ and was at R10.4180/$ by 15:43 GMT, down 0.87% from Tuesday's closing level in New York.
Government bonds were also sold on the day, pushing the yield on the heavily traded issue due in 2026 up 6.5 basis points to 8.46% and that for the 2015 paper 7 basis points higher to 6.31%.
The rand move was largely a reflection of a stronger dollar after data showed US private sector hiring rose by the most in a year in November.
"A couple of the Fed members have hinted that if the jobs data is good - and today's was far better than the market anticipated - then tapering would be on the table at the December Fed meeting," said Steve Arnold, a bond trader at Investec.
"So you're finding there's a global risk-off taking place, guys are starting to sell riskier assets in anticipation of tapering beginning."
The rand's decline on Wednesday extended the previous day's losses after the Reserve Bank said South Africa's current account deficit - a longstanding weak spot for the rand - widened more than expected to 6.8% of GDP in the third quarter.
The current account, coupled with a budget deficit which has persisted at around 5% of GDP since a 2009 recession, makes the rand particularly vulnerable during bouts of global risk aversion.