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Johannesburg - The rand weakened against the dollar early on Friday, but stayed within the previous day's range, waiting for further direction from offshore markets where investors are showing concern about China's growth.
The rand has traded in a 10.9650 to 10.6980 range this week, driven mainly by risk sentiment towards emerging markets.
Emerging markets are taking some pain because of fears of a growth slowdown in the world's second-largest economy and tensions in Ukraine.
The rand fell 0.2% to 10.8280 to the dollar at 06:51 GMT, from a 10.8050 close in New York on Thursday.
Analysts said it could weaken back up to 10.90 levels in this session.
Government bonds rose to their highest in six weeks on the front end of the yield curve as investors discounted steep increases in interest rates.
This was after SA Reserve Bank (Sarb) governor Gill Marcus said on Thursday that market expectations of big hikes were overdone.
"The Sarb governor's comments last night will continue to unsettle a few nerves," Thando Vokwana, a bond trader at Rand Merchant Bank, said in a note.
Yields
Yields fell 10.5 basis points to a week low of 6.91% on the short-dated benchmark 2015 note and were down 4.5 basis points to 8.505% on the 2026 issue.
"Questions still arise regarding the likelihood of another possible interest rate hike at the next MPC meeting, with the market assigning close to 50% probability of a 50 basis point hike at that meeting," Vokwana added.
The central bank, which imposed a 50 basis point hike in the repo rate to 5.5% in January, announces its next decision on March 27.
The Treasury will issue R800m of inflation-linked bonds over the 2025, 2038 and 2050 bonds at 09:00 GMT.
The rand has traded in a 10.9650 to 10.6980 range this week, driven mainly by risk sentiment towards emerging markets.
Emerging markets are taking some pain because of fears of a growth slowdown in the world's second-largest economy and tensions in Ukraine.
The rand fell 0.2% to 10.8280 to the dollar at 06:51 GMT, from a 10.8050 close in New York on Thursday.
Analysts said it could weaken back up to 10.90 levels in this session.
Government bonds rose to their highest in six weeks on the front end of the yield curve as investors discounted steep increases in interest rates.
This was after SA Reserve Bank (Sarb) governor Gill Marcus said on Thursday that market expectations of big hikes were overdone.
"The Sarb governor's comments last night will continue to unsettle a few nerves," Thando Vokwana, a bond trader at Rand Merchant Bank, said in a note.
Yields
Yields fell 10.5 basis points to a week low of 6.91% on the short-dated benchmark 2015 note and were down 4.5 basis points to 8.505% on the 2026 issue.
"Questions still arise regarding the likelihood of another possible interest rate hike at the next MPC meeting, with the market assigning close to 50% probability of a 50 basis point hike at that meeting," Vokwana added.
The central bank, which imposed a 50 basis point hike in the repo rate to 5.5% in January, announces its next decision on March 27.
The Treasury will issue R800m of inflation-linked bonds over the 2025, 2038 and 2050 bonds at 09:00 GMT.
