The rand softened in the afternoon session on Friday, trading at its weakest levels of the day amid a stronger dollar particularly against the euro, according to a local trader said.

At 3.25pm the rand was bid at 7.5767 to the dollar from 7.5222 at its previous close. It was bid at 11.2264 to the euro from its previous close of 11.2325 and was at 12.5020 against sterling from 12.5395.

The euro was bid at US$1.4817 from US$1.4914 overnight.

A local currency trader said: "The rand has weakened since about midday, with dollar strength against the euro the main driver. We saw targets on the topside at 7.62 against the dollar. If this rand weakness continues, the next level is at 7.69.

"Over the short term we see rand weakness," the trader said.

Dow Jones Newswires reported that with low risk appetite prevailing in global markets, the dollar and the yen were higher in Europe on Friday.

The euro was the main loser as Japan admitted that its economy was sliding back into deflation for the first time in three years.

This gloom about the global recovery, which has been hanging over markets for the last day or two, is unlikely to be dispelled in the near term given the lack of new economic data.

US President Barack Obama and Treasury Secretary Timothy Geithner only made matters worse with their warnings that a double dip recession remains a risk for the US if the fiscal deficit isn't resolved.

Although the Organisation for Economic Coordination and Development raised its forecast for global growth next year to 1.9 percent from 0.7 percent, global equity markets remained in decline.

However, in Europe, major bourses were heading a little higher at the start on reports of options expiry and some bargain hunting. Analysts suggested that losses earlier in the week may also have been overdone.

Later in the day, the focus will be on a speech by European Central Bank President Jean-Claude Trichet for any comments he might make on the recent weakness of the dollar, suggesting that a strong dollar is in everyone's interests.

Foreigners keep bonds steady on month

Bonds were off their worst levels of the day on Friday afternoon, but remained around six basis points weaker from the previous close ahead of a large amount of issuance in the week ahead. However, foreign buying this week has added a notable underpin.

By 3.40pm the short-term government R154 bond was bid at 7.255 percent from a previous close of 7.145 percent. The medium-term R157 was at 8.335 percent from 8.270 percent at its previous close, while the long-term R186 was at 9.030 percent from 8.930 percent before.