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Johannesburg - The rand weakened for the third day against the dollar on Wednesday, with the greenbank still buoyed by stronger than expected US housing data and as Greece's debt problems dampened appetite for riskier assets.
The pressure on the rand was partly offset by news that the government sealed an agreement with unions to raise public sector wages by 7%, averting a strike by 1.3 million workers.
READ: Public sector: This is best wage deal we could get
The rand was at 11.9500 by 08:38, a 0.35% retreat from Tuesday's last level at R11.9080.
This was mainly due to the dollar's broad-based gains against major currencies after the solid housing numbers.
"Given that this is the first positive reading in US data in recent weeks, we suspect that rand bears saw this as an opportunity to place fresh long dollar positions," Barclays Africa said in a note.
READ: Dollar extends gains, boosted by strong data
A hawkish tone from US Federal Reserve minutes later in the day would add pressure on the rand in a market where risk appetite had taken a knock from renewed worries about the impact of Greece's financial woes, analysts said.
Traders expected little impact from domestic inflation data at 10:00, although a higher than expected print could fuel expectations of a domestic rate hike later this year, if not at this week's monetary policy meeting.
The South African Reserve Bank will announce its rates decision on Thursday, with almost all the economists polled by Reuters expecting the benchmark repo to stay unchanged at 5.75%.
Government bonds were mostly flat in early Wednesday trade, with the heavily traded 2026 instrument yielding half a basis pointer lower at 8.04%t compared with Tuesday's close.
