Johannesburg - The rand plunged to a fresh 4-year low against the dollar for the second straight session on Wednesday, dragging bond yields to over one-month highs as poor investor sentiment weighed.
Weaker-than-expected economic growth data in the previous session saw the rand sell off heavily. Expectations that the US Federal Reserve will scale back quantitative easing added to the currency's woes.
Emerging market currencies trading against the dollar have weakened on the likelihood that inflows fuelled by the Fed's stimulus programme could dry up.
The local currency fell to R9.8600/$, its weakest in over four years.
Analysts say the rand's fall through R9.80 opens up the door for a fall all the way through R10.0/$. In the meantime, support is seen in the R9.87 region.
Bond yields have trekked higher with the weaker currency.
"Bonds are under major pressure given what's happened with the currency and given what's happened with global market yields," said Richard Farber, bond trader at World Wide Capital Securities.
The yield on the 2026 benchmark issue climbed 14 basis point to 7.325% while that on the shorter-dated 2015 issue added 9 basis points to 5.35%.
"We still favour the front end of the curve. We think that that shows a lot of value given the GDP number from yesterday. We are not inclined to be aggressive buyers but we do think that there will be buyers around," Farber added.
Treasury will announce bond issuance plans for next week at 11:00.