The rand recovered slightly in late trade on Friday but remained weak against major currencies after earlier falling more than two percent against both the dollar and the euro on the back of rising risk aversion.

Traders said most emerging market currencies were under pressure with more poor corporate results in the US and elsewhere quelling risk appetite.

They pointed out however that the local market was also very thin ahead of the weekend.

By 3.55pm the rand was bid at 7.6780 to the dollar from a previous close of 7.5550 after earlier sliding to an intraday worst level of 7.7387. It was bid at 11.8604 to the euro from a previous 11.6932 and an intraday worst level of 11.9740. Against sterling it was bid at 14.9695 from 14.8495 before.

The euro was bid at US$1.5435 from US$1.5403 overnight, while gold was quoted at $881.90 a troy ounce from $883.45 overnight.

Dow Jones Newswires reports that the dollar retraced some overnight losses against its major rivals after the release of the US trade balance data for March, but is still weaker early Friday from a day earlier.

The US trade deficit narrowed more than expected in March, by 5.7 percent to $58.21-billion, as imports of cars and crude oil dropped amid record-high oil prices and a weak economy, the Commerce Department said Friday.

"The data is slightly better than expected," said Greg Anderson, currency strategist at ABN Amro in Chicago. "We're seeing some signs that the US trade deficit is starting to shrink a little bit."

"But this is not panacea for the US flow deficit problems," he said.

Indeed, the dollar's immediate bounce against the euro and yen after the data has waned and it remains down on the day.

Friday morning in New York, the euro was at $1.5451 from $1.5399 late Thursday, while the dollar was at Y102.80 from Y103.92. The euro was at Y158.83 from Y160.02, according to EBS. The U.K. pound was at $1.9476 from $1.9526 late Thursday, and the dollar was at CHF1.0424 from CHF1.0523.

The dollar declined against the euro and yen overnight and earlier in the New York morning after the European Central Bank showed no signs of easing a day earlier and oil rallied up to another record.

Risk aversion is high, spiked also by a $7.8-billion earnings loss reported by American International Group. The dollar fell as low as Y102.61 and the euro declined to Y158.60 - their lowest values against the yen since mid-April. The lower yielding yen usually benefits during time of low risk appetite as investors pull out of higher-yielding, riskier assets.

European Central Bank President Jean Claude essentially indicated Thursday that the euro zone's monetary policy outlook remains unchanged. The governing council voted to keep interest rates steady, and Trichet's post-meeting remarks focused on risks to price stability.

Many market participants had expected Trichet to soften his hawkish stance following the recent run of weak data out of the euro zone.

Now, currency analysts say the euro is likely headed back up against the Greenback.

Bonds stabilise, but remain in the red

Bonds stabilised during the afternoon session on Friday, but remained in the red as a weaker rand and sky-high oil prices weighed.

Further yield curve inversion was evident as the shorter end lost the most – a reflection of the short-term rate and inflation negativity.

Brent crude futures were last at $125.14 per barrel from $122.84 overnight.

By 3.44pm the short-term government R153 bond was at 10.405 percent from its previous close of 10.345 percent, while the medium-term R157 was at 9.495 percent from its previous close of 9.470 percent. The longer-term R186 bond was bid at 9.300 percent from its previous close of 9.290 percent.

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