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Johannesburg -The rand steadied against the dollar early on Monday and was likely to gain in the session, rebounding from a sharp and dramatic fall that took it to four-year lows last week.
The rand was at R10.0600/$ at 08:24, not too far off its close in New York on Friday.
The rand hit a low of R10.2850 in trade on Friday when investors dumped the currency on concerns about lingering labour unrest in the crucial mining sector and poor economic growth data.
The weak currency has raised market speculation that the central bank may hike interest rates to slow imported inflation, even as growth struggles.
The rand's recovery will largely depend on whether there is further negative news on mining and plans for the US Federal Reserve's quantitative easing programme, which has seen increased inflows into emerging markets such as South Africa.
"Any resumption of the belief that the Fed will persist with its ultra-accommodative stance will see the dollar come under renewed pressure to further help the rand stage a recovery," said Tradition Analytics in a morning note to investors.
"The dollar/rand shows some promise of a retreat and on balance given the levels at which the rand is trading, a small, short dollar-rand position from levels above R10.10 is favoured this morning to target a move back below R10.00 in the coming days."
Investors will be watching for local PMI data at 11:00, and vehicles sales numbers at 13:00.
Government bonds were slightly firmer, with that on the 2026 benchmark bond down 1 basis point to 7.575%.
Offshore accounts were net sellers of local debt in the past week, offloading paper for the third straight week as investor sentiment towards South Africa took a hit.
Tuesday's weekly bond auction will also be a key gauge for sentiment towards South African debt.
