JOHANNESBURG: South Africa's rand edged firmer against a globally struggling dollar on Wednesday although nagging domestic concerns could keep gains largely in check.
By 1611 GMT the rand was changing hands at 9.8960 per dollar, a 0.3 percent gain from 9.9250 at the close of New York trade on Tuesday.
Government bonds retreated further and yields rose slightly, with demand for local debt remaining lukewarm as investors anticipate increased issuance to plug a national budget deficit of about 5 percent of gross domestic product (GDP).
The yield for the 2026 bond added 2.5 basis points to 8.2 percent and the paper maturing in 2015 ticked up half a basis point to 6.125 percent.
Demand for local assets remains tentative, held back by a cloudy outlook for Africa's biggest economy and fears that tense wage negotiations in the mining sector could trigger a fresh wave of labour unrest.
South African mining companies have been weighed down by rising costs while violent protests in the industry left more than 50 people dead last year, triggering a run on the rand and bonds.
"The rand's external backdrop remains cyclically adverse. Demand for South Africa's exports is weak and thus our terms of trade remain on the back foot," Standard Bank said in a market research note.
"To make matters worse, international investor appetite for emerging market debt looks to be more constrained than we had become accustomed to in recent years."
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