The rand was slightly weaker than its overnight levels in early trade on Friday, having failed to respond to a recovery on Wall Street overnight. The Dow Jones Industrial Average rose 52.43 points after a drop of more than 200-points on Wednesday.

By 08.40am the rand was bid at 7.6030 to the dollar from a previous close of 7.5550. It was bid at 11.7318 to the euro from a previous 11.6932 and at 14.8246 against sterling from 14.8495 before.

The euro was bid at $1.5420 from $1.5403 overnight, while gold was quoted at $882.95 a troy ounce from $883.45/oz overnight.

ETM analysts said in their morning report that the Nikkei has come under significant pressure today, closing down two percent, following downbeat forecasts from Toyota and Bridgestone who see the rise in raw materials costs as denting profit margins.

As a result, the carry trade is now being questioned and it is no coincidence that the rand failed to respond to the rally on Wall Street as a result, they said.

"As the carry trades are being squeezed through losses on the Nikkei so the JPY has made some advancement against the USD despite the USD's recent recovery suggesting that carry trades generated outside of Japan might also come under some pressure," they explained.

A local trader said the rand was barely changed from levels seen late yesterday and that the MTN deal talk was still offering some support to the currency, as well as offshore demand for South African equities.

Earlier this week there was speculation that India's Bharti Airtel might pitch an offer for local mobile services group MTN. MTN confirmed that the two parties are engaged in exploratory discussions. If the talks come to anything, it could be the largest foreign direct investment ever in the country.

Oil, inflation sour proceedings

Bonds drifted weaker in early trade on Friday as the high oil price and concerns around inflation continued to plague investors.

By 08.37am the short-term government R153 bond was at 10.385 percent from its previous close of 10.345 percent, while the medium-term R157 was at 9.500 percent from its previous close of 9.470 percent. The longer-term R186 bond was bid at 9.320 percent from its previous close of 9.290 percent.

I-Net Bridge