JOHANNESBURG: South Africa's rand softened against the dollar on Tuesday but significant weakness is unlikely as greenback sellers should give it support at the 7.90 level.
The rand hit two-week highs of 7.806 before retreating and government bonds also took a breather after hitting multi-week highs.
A weekly debt auction, with results out after 0900 GMT, is expected to indicate whether local bonds are attractive and whether buyers are taking advantage of recent weakness.
The rand was trading at 7.87 to the dollar, 0.25 percent weaker than Monday's close of 7.85.
"There does seem to be strong bids all the way down to 7.80 and I would suggest there might be opportunity to sell at 7.90," said a local dealer.
"For now, equities are trading well, risk is on and everything seems to have settled down ... people might be reluctant to be short," he added.
A weekend pledge by German and France to do all that is necessary to recapitalise banks and settle the debt crisis has raised hopes there was a plan to contain the euro debt crisis.
The local bourse is set to open slightly lower after posting its highest close in nearly three weeks on Monday.
The JSE's Top-40 index December futures contract was down 0.15 percent before the 0700 GMT start of trade.
On fixed income, the yield on the 2015 bond was up 1.5 basis points to 6.635 percent and that on the 2026 issue went up 2.5 basis points to 8.295 percent.
The government will offer 1.1 billion rand of 2021 bond and 1 billion rand of 2031 bond at its auction.
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