A file picture shows the South African twenty rand note.
A file picture shows the South African twenty rand note. REUTERS

South Africa's rand firmed slightly against the dollar on Monday, recovering from near 8-week lows seen at the end of last week as the greenback wobbled and metal prices rose.

Government bonds weakened, extending last week's heavy losses after the Reserve Bank signalled that the rate cutting cycle was over and with some market players pricing in a slight chance of an interest rate rise by year-end.

Yields were at multi-month highs, with that on the 2015 issue ZAR157= up two basis points at 7.915 percent and that on the 2026 note ZAR186= ticking up 3.5 basis points to 8.815 percent.

In the money market, the 6x9 foward rate agreement rose to 5.8/5.88 percent, compared with a repo rate of 5.5 percent, pointing to expectations of an interest rate rise.

The rand ZAR=D3 was trading at 7.03 against the dollar at 0640 GMT, not far from Friday's New York close of 7.05. It hit a near 8-week low of 7.14 on Friday, partly due to the heavy bond sell-off.

Although the rand threatened to break weaker than its 200-day moving average of 7.15 on Friday, traders say the bullish trend has not completely reversed yet.

I reckon we could see some stability setting in around 7.00/dollar after those fluctuations last week and we could see it a bit below that. We are looking at a range of 6.92 and 7.10, said Craig Zaayman, managing director at Purple Capital Treasury.

The rand is still under pressure to remain strong, although there's a shift away from the very bullish trend around 6.50, he added. But the rand around 6.80 is still a strong rand.

Local stock futures pointed to a higher open on the bourse, with the JSE's blue chip Top-40 March futures contract ALSIc1 up 0.4 percent before the 0700 GMT start of trade