The rand has unwound the gains it garnered earlier in the week as losses on Wall Street overnight raised the risk aversion stakes once more.

By 08.56am on Thursday the rand was bid at 7.6160 to the dollar from a previous close of 7.5731. It was bid at 11.6841 to the euro from a previous 11.6515 and at 14.8709 against sterling from 14.7843 before.

The euro was bid at $1.5347 from $1.5398 overnight, while gold was quoted at $866.75 a troy ounce from $868.80/oz overnight.

South African market analysts said volatility on the stock market was a potential threat to the carry trade extending the rand's recovery.

"This has been borne out overnight as Wall Street's losses have once again fuelled a fresh surge in risk aversion," they explain.

Rand, oil spoil bonds' party

Bonds retreated in early trade on Thursday as the rand lost some of its recent allure and surging oil sparked inflation concerns anew.

“Recent gains in the bond market induced by the recovery of the rand are expected to unwind today as the rand dropped sharply overnight,” say market analysts ETM.

“Add to that the rise in oil prices to fresh record highs of above $123.00 per barrel on the back of a drop in distillate stocks and increased oil demand by countries experiencing power shortages and the inflation outlook this morning looks considerably worse than it did yesterday,” they conclude.

Foreigners were net buyers of R837.391 worth of South African bonds on Wednesday after net purchases of R621.523-million worth of local bonds on Tuesday, Bond Exchange of South Africa statistics show.

Nominal cumulative volume was R52.843-billion on Wednesday from R139.827-billion on Tuesday.

I-Net Bridge