JOHANNESBURG: South Africa's rand softened marginally against the dollar in early trade on Thursday but is expected to remain in a tight range as local traders await the resolution of talks to resolve the so-called "fiscal cliff" in the United States.
The rand, which has failed to break out of an 8.80-9.00 range during the last week, was trading at 8.8210 to the greenback at 0646 GMT.
The euro firmed as the United States Congress pushed toward compromise on a deal to resolve the fiscal cliff, but agreement still appeared elusive, keeping emerging market investors on edge.
"The currency market at the moment is relatively lacklustre, said Brigid Taylor, head of institutional sales at Nedbank. "The US is now in the spotlight and we could potentially see deterioration."
Government bonds recovered from yesterday's losses with yields falling 2.5 basis points on the benchmark 2026 paper and 4 basis points to 5.47 percent on the 2015 note.
Bonds weakened and yields edged higher during the previous session when Reserve Bank Governor Gill Marcus, addressing a conference of South Africa's metal-workers union, reiterated a hawkish tone on inflation, denting hopes for interest rate cuts.