South Africa's rand reversed its earlier losses against the dollar on Wednesday and government bond yields pulled back from the previous day's multi-week highs as local assets took a breather from a hammering brought on by global risk aversion.
Traders said local assets were still tracking global moves, with little impact seen from retail sales data which backed the Reserve Bank's decision last week not to cut interest rates further as some market players had anticipated.
The rand earlier hit a near-week low of 8.24 against the dollar before pulling back to 8.1445 by 1616 GMT, up
0.34 percent on the day.
There being no real headlines out of Europe would probably have helped the cause a little bit today, people taking a breather from Monday and Tuesday's moves ... when we lost almost 40 cents on the rand, Standard Bank trader Warrick Butler said.
For further rand weakness it's crucial that we stay above (weaker than) 8.12; if that fails and we go back below that then we're going to move back into the old 7.80-8.10 range again, Butler said.
A close weaker than 8.12 could open the rand up for a move to its early October low of 8.35 in the next couple of days.
Government bonds edged higher after Tuesday's sharp fall, and the yield on the 2015 government bond subsequently dipped 3.5 basis points to 6.795 percent while that for the 2026 bond yield fell half a basis point to 8.48 percent.
Wednesday's reprieve for the rand had boosted local debt, said Sulette Wentzel, fixed income dealer at Cadiz Asset Management.
(Trading) has been very thin but if you look at the curve, where it was this morning and where it is now, it steepened a bit, meaning demand would have been on the shorter 157 side, or there would have been one or two sellers on the 186 side, Wentzel said.
Traders and analysts said data showing growth in retail sales quickened to 8.3 percent year-on-year in September showed Reserve Bank Governor Gill Marcus was justified in not lowering rates further from current three-decade lows
There's been quite a lot of discussion about should she or shouldn't she have cut interest rates. This is another number that's another tick in the box for her. But it had no impact on the rand at all, it's really at the mercy of external factors for the most part, Butler said.