South Africa's rand briefly ploughed a fresh 14-month low against the dollar on Tuesday before wiping out most of those losses as comments that Italy is not likely to default on its debt helped ease some of the risk aversion that has beset emerging markets.

The recovery in the currency supported government bonds, bringing back foreign investors who sold local debt heavily last week in a global flight to assets seen as offering relative safety.

Dealers expect cautious trading ahead of the Reserve Bank's interest rate decision on Thursday, with both traders and analysts expecting it to keep the key repo rate on hold at 5.5 percent.

The rand fell more than one percent to 7.75 against the greenback earlier in the session, its weakest level since early July 2010, before clawing back to 7.6760 by 1545 GMT, down just 0.36 percent from Monday's close.

But the currency, which has broken several key support levels over the past three weeks, was trading at weaker levels than its short, medium and long-term moving averages, suggesting a continued bearish tone in the days ahead.

Concerns regarding the euro zone debt situation are ever present, said Anisha Arora, emerging markets analyst at 4CAST. Technically for dollar/rand 7.769 and 7.785 will provide decent resistance, but 7.800 will be the key area to watch, she added.

The rand has weakened about four percent this year, with most of those losses coming in the last few sessions.

Tuesday's late reprieve for the currency filtered through to bonds, which had fallen sharply last week as foreigners spooked by the euro zone debt crisis sold a net 6 billion rand of local debt.

The yield on the 2015 issue fell 14 basis points on the day to 6.84 percent and that on the 2026 note was 4.5 basis points lower at 8.365 percent.

For the last few trading sessions bonds have been tracking the weakness of the currency pretty closely and we've seen offshore hedge funds selling bonds. With the currency firming up a bit we've seen some of the pressure coming off bonds, Absa Capital trader Daniel Sabiston said.

We've had some respite from the global risk-off that we've seen over the past week.