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Johannesburg - The rand edged weaker early on Tuesday as public sector wage pressures threatened to scupper the unit's recovery from 13-and-a-half-year lows.
At 08:45 the rand had softened 0.2% to R12.5000/$, having pulled away from the R12.6600 low in preceding sessions on what analysts said was a technical correction towards support around 12.40.
"Overnight trading was on more positive footing as traders abroad awoke to reality that last week’s 3.3% depreciation was overdone," analysts at research firm NKC African Economics said in a note.
The currency extended losses against the euro having slipped over 1% in the previous session, bid at 14.1232, as the common currency reversed losses against the greenback triggered by Friday's robust US jobs data.
READ: Sturdy US jobs report boosts chances of rate hike
Local bonds firmed, with the government issue due in 2026 shedding 3 basis points to 8.35%, as interest in the local debt market returned.
Public Service and Administration Minister Nathi Mthethwa said on Monday a new pay deal for public servants would increase the government's wage bill from R412.7bn to R466.8bn over three years, reviving concerns about the Treasury's ability to put a lid on spending.
READ: State wage bill to cost SA R61bn
Standard and Poor's releases its latest review of South Africa's credit rating on Friday, with the country's large deficits likely to remain in focus, posing downside risks.
