The rand barely moved after a widely expected decision where the Reserve Bank kept interest rates on hold.(SABC)
South Africa's rand fell more than 1% on Thursday against a dollar that was bolstered by better-than-expected , taking local bond yields to their highest levels in the session.
The rand, which has lost 18% on the dollar since the start of the year, dropped 1.22 % as of 1614 GMT in the session to 9.9395.
The currency had hit a session low of 9.9450 after the United States released positive factory activity data and lower claims for jobless benefits. The data signalled strength in the world's biggest economy, which could augur well for the Federal Reserve to withdraw monetary stimulus.
The battered rand hit a five-week high of 9.7750 on Wednesday, and had firmed in recent days on views the Fed would keep the taps flowing on monetary easing that has boosted investments in emerging market assets.
The rand barely moved after a widely expected decision where the Reserve Bank kept interest rates on hold, but Governor Gill Marcus said policymakers were concerned about a falling currency stoking inflation.
"It is the weakness of the rand that remains the key concern for policymakers," Shilan Shah, Africa economist for Capital Economics, said in a note.
"Though most of the correction has probably already taken place, we wouldn't rule out further falls. Indeed, with political risk increasing amid a difficult wage negotiation season, we think the rand could fall to around 10.25 to the dollar by the end of this year."
Labour friction in the mining sector has slowed production of commodities for export and an acrimonious start to wage talks in the gold sector has raised concern of more strife.
Yields on government bonds rose to 7.865 on the 2026 benchmark bond and to 5.96 % on the shorter-dated 2015 paper after the rand fell in late afternoon trade.