Rand firms against the dollar, remains fragile over Ukraine tensions

JOHANNESBURG (Reuters) – South Africa's rand pulled back from a week low against the dollar on Friday after news of a Malaysian airplane being shot down over Ukraine pushed the currency lower.

The rand was trading at 10.7155 versus the greenback at 0639 GMT, gaining 0.42 percent from its New York close on Thursday.

The local unit dropped by almost half a percent in the previous session to touch the 10.77 mark after the central bank raised interest rates – though by just 25 basis points instead of the usual 50 – in an effort to curb high inflation.

Its Thursday gains after the rate move were knocked back as news of a Malaysian airplane crashing on theUkraine/Russia border reverberated through international markets, intensifying risk aversion.

"As focus shifts back to international events post the SARB MPC, the rand in its fragile position is vulnerable to a resumption of underperformance in less favourable risk conditions," ETM Analytics said in morning market note.

"The break above 10.75 warrants some caution."

Government bonds weakened slightly with yields on both the 2015 paper and the longer-dated 2026 paper ticking up 1.5 basis points to 6.64 percent and 8.145 percent respectively.