JOHANNESBURG: The rand weakened on Thursday, but local bonds continued to draw buyers, as investors' aversion for riskier yet higher yielding assets eased following weak inflation figures in the eurozone.
As of 0625 GMT, the rand had softened 0.08 percent to 11.6895 per dollar, remaining in a tight and likely to firm with some market watchers anticipating a correction in the high-flying dollar.
Data on Wednesday showed the euro zone slipped into deflation in 2014, for the first time since 2009, increasing the likelihood of the European Central Bank printing money in a bid to stimulate economic activity.
Riskier emerging market assets were buoyed by the euro zone's woes, as well a pause in the slide of global oil prices, as investors sought higher yields, particularly in fixed income assets.
"Low oil means low inflation, means a stagnant global economic growth belief, means lower interest rates, means you gotta love South Africa's lucrative government bond yields," said Warrick Butler of Standard Bank in a note.
The yield on the benchmark government paper due in 2026 went to a fresh 1-month low early on Thursday at 7.715 percent, so far shedding 17 basis points in 2015.
In local data, South Africa's Chamber of Commerce and Industry (SACCI) publishes its December business confidence index at 0730 GMT.
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