JOHANNESBURG: The rand weakened against the dollar on Tuesday as investors trimmed risk due to uncertainty about the US Federal Reserve's scaling back of its monetary stimulus.
South Africa's currency fell up to 0.9 percent to 10.3750 to the dollar compared with Monday's close, and was trading down 0.6 percent at 10.3430 at 1537 GMT.
Local traders came in on Tuesday after a long weekend and offloaded some rands as investors braced for the Federal Reserve's monetary policy statement on Wednesday.
Some market players are betting recent upbeat data out of the United States may prompt the bank to start reducing its bond-buying programme either this month or in January, but most predict tapering to begin in March.
The Fed's stimulus programme has helped to prop up emerging market currencies such as South Africa's rand.
"The pressure on the rand is persistent as Fed tapering comes nearer and the risk of a more severe sell-off is high," Lars Christensen of Danske Bank said in a note, adding that the bank was bearish on the rand over a 12-month period.
Yields on government bonds dropped 3 basis points to 8.205 percent on the benchmark 2026 note and fell 2 basis points to 6.075 percent on the 2015 paper, although dealers said the resilience in bond prices was likely to crumble closer to the Fed decision on Wednesday.
Data from the Johannesburg Stock Exchange showed offshore investors continued to sell local debt last week, a steady trend since early November.
South Africa depends on inflows to help plug a current account deficit that is near 7 percent of gross domestic product (GDP).
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