A softer rand tracked the euro against the dollar in midday trade on Friday, amid a fall from most currencies following news on Thursday from Dubai that government-owned investment company Dubai World, which has almost $60-billion worth of liabilities, asked creditors to postpone its forthcoming payments for six months.

At 11.31am the rand was bid at 7.5658 to the dollar from 7.4866 at its previous close. It was bid at 11.2805 to the euro from its previous close of 11.2327 and was at 12.3875 against sterling from 12.3578.

The euro was bid at $1.4909 from $1.5007 overnight.

A local trader said: "News from Dubai is still having an effect on markets, and we will track the euro against the dollar for direction. If the euro breaks 1.48 against the dollar then we could see further rand weakness, however the range for the time being is 7.54-64 against the dollar."

RMB analysts John Cairns and Nema Ramkhelawan in a morning report noted that markets had been left in turmoil after the Dubai World debt restructuring, with widely disparate and erratic moves.

"Normally the reaction to such negative news is a knee-jerk move that often just fades away. The problem though is that the all-important New York markets haven't yet reacted given that they were closed yesterday. Wall Street is expected to open 2 percent lower but it might well have other ideas. The problem also in trying to fade the spike is that the rand's reaction has been relatively muted," the analysts said.

"Look for volatile trading on the rand today. This was mostly concentrated in US dollar/rand yesterday but we could see fallout in the crosses today.

Direction is far from clear but while we said yesterday that we will almost certainly end the week at the bottom of the 7.32/35 - 7.62 range, it now seems more likely that we will be closer to (and, if anything, actually above) the top," RMB said.

Dow Jones Newswires said that the foreign exchange markets saw a broad move out of currencies perceived as more risk sensitive, with the euro taking a hit as the European markets' reaction on Thursday to the Dubai news reversed the recent "risk on" trades.

Japanese exporter stocks were weaker too as the yen's climb against the dollar reached heights not seen in almost 15 years. The greenback hit a 14-year low of Y84.82 before recovering some ground to trade at Y86.35 at 09:00 GMT, down from Y86.59 late on Thursday.

Elsewhere, the euro was trading at $1.4871, down from $1.5020, and sterling was quoted at $1.6363, down from $1.6461.

Bonds better bid

Bonds were off their worst levels during the morning session on Friday as investors looked for something of a safe haven in light of the large Dubai debt bubble now on the landscape and about to pop. But the future of the market in the afternoon lies in the hands of the US reaction to the news.

By 12.07am, the short-term government R154 bond was bid at 7.400 percent from a previous close of 7.320 percent. The medium-term R157 was at 8.495 percent from 8.470 percent at its previous close, while the long-term R186 was at 9.220 percent from 9.180 percent before.