JOHANNESBURG: South Africa's rand ended the week firmer against the dollar, pulling away from recent five-year lows after poor US jobs numbers reduced the risk of a sharp scaling back of US monetary stimulus.
The rand strengthened to a session high of 10.6645 in late afternoon trade after US non-farm payrolls data came in well below market expectations, bolstering markets' view that the US Federal Reserve would reduce its stimulus programme only gradually.
At 1640 GMT, the rand was up just over 1 percent at 10.6770 to the dollar, after closing in New York on Thursday at 10.7950. It hit a five-year low of 10.8330 on Thursday.
The rand has been under heavy pressure since the Fed announced it would scale back on its monthly bond-buying programme as the US economy improves.
That would reduce the flow of cheap money, much of which has headed to emerging markets including South Africa.
Africa's largest economy runs a high current account deficit near 7 percent of GDP, which is historically funded by offshore inflows.
That means Friday's reprieve in the rand is likely to be short-lived as the fundamental economic weakness of the economy remains.
South Africa is also grappling with high unemployment and is running a budget deficit that could prompt ratings downgrades if it continues to expand.
"Despite the current easing from Thursday's multi-year high at 10.833, we do not see any signs of a trend change," said Kamran Sheikh, technical strategist at Informa Global Markets.
"Dollar-rand strength will most likely continue. Our focus is on the 11.000 level, where there is a 2.5 year uptrend resistance."
The rand tested five-year lows over the past two sessions and though it rebounded on Friday, analysts expect the currency to hit a barrier at the 10.57-10.60 area.
Government bonds tracked the rand, with yields dropping 9 basis points to 8.195 percent on the benchmark 2026 issue and fallling 9.5 basis points to 6.16 percent on the 2015 note.
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