JOHANNESBURG: South Africa's rand retreated slightly against the dollar on Thursday as better-than-expected U.S. jobs data offset the boost from the previous day's dovish Federal Reserve statement.
Local government bonds, however, held their ground, with some investors betting that interest rates in the world's biggest economy might stay near zero for longer, maintaining the appeal of high-yielding emerging market assets.
At 1620 GMT the rand was 0.17 percent softer at 11.6300 to the dollar compared with Wednesday's New York close.
But government debt edged higher, with the yield for paper due in 2026 falling 8.5 basis points to 7.61 percent.
"The Fed minutes last night were a lot more dovish than markets expected. That's caused a risk-on mentality for the markets and has benefited local bonds," Rand Merchant Bank trader Alexa Nicolau Bank said.
Analysts said the rand could come under increased pressure next Wednesday if Finance Minister Nhlanhla Nene announces bigger budget deficit estimates for the next three financial years than forecast in October.
South Africa's persist twin deficits on its budget and current account have long been a source of vulnerability for the rand, helping weaken it nearly 10 percent against the greenback last year.
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