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Johannesburg - The rand weakened 1% against the dollar on Wednesday, as favourable jobs data out of the US boosted the greenback.
In afternoon trade the unit traded at R6.75/$ 1.05% weaker than Tuesday's close at R6.68/$.
Government bonds extended recent strong gains as the market anticipates another domestic interest rate cut later this month, with the yield on the benchmark 2015 ZAR157 subsequently falling 22 basis points to 7.20%, according to Reuters data.
The rand's weakness was not as pronounced as it might have been had volumes not been so low, said Michael Keenan, the head of Forex Research at Standard Bank.
Asked why a stronger US economy might not encourage risk appetite in emerging markets, Keenan added that the issue of risk premium had to be considered.
"Risk premium is the big one ... if the US economy grows almost as fast as emerging markets, such as SA, then one has to ask what kind of risk premium is being offered," he said.
Earlier the US released jobs data that had been much stronger than expected.
Dow Jones Newswires reports that the dollar jumped against the euro and yen after Automatic Data Processing (ADP) said US employers added 297 000 private sector jobs last month.
Economists had expected ADP to report a job gain of 100 000 in December - a third of the actual number.
The estimated change in employment for November was revised to show a rise of 92 000 versus the 93 000 increase first reported.
The report said the gain "suggests nonfarm private employment grew very strongly in December, at a pace well above what is usually associated with a declining unemployment rate".
In afternoon trade the unit traded at R6.75/$ 1.05% weaker than Tuesday's close at R6.68/$.
Government bonds extended recent strong gains as the market anticipates another domestic interest rate cut later this month, with the yield on the benchmark 2015 ZAR157 subsequently falling 22 basis points to 7.20%, according to Reuters data.
The rand's weakness was not as pronounced as it might have been had volumes not been so low, said Michael Keenan, the head of Forex Research at Standard Bank.
Asked why a stronger US economy might not encourage risk appetite in emerging markets, Keenan added that the issue of risk premium had to be considered.
"Risk premium is the big one ... if the US economy grows almost as fast as emerging markets, such as SA, then one has to ask what kind of risk premium is being offered," he said.
Earlier the US released jobs data that had been much stronger than expected.
Dow Jones Newswires reports that the dollar jumped against the euro and yen after Automatic Data Processing (ADP) said US employers added 297 000 private sector jobs last month.
Economists had expected ADP to report a job gain of 100 000 in December - a third of the actual number.
The estimated change in employment for November was revised to show a rise of 92 000 versus the 93 000 increase first reported.
The report said the gain "suggests nonfarm private employment grew very strongly in December, at a pace well above what is usually associated with a declining unemployment rate".
