The rand recovered from its early morning worst level in midday trade on Friday on the back of exporter demand.
"We have seen a plethora of orders from exporters and foreigners, which is why we are about eight cents better than our worst level," a local trader said.
At 11:42 local time the rand was bid at R8.3577 to the dollar from today's worst level of R8.4457, Thursday's close of R8.3606, Wednesday's close of R8.3155, Tuesday's close of 8.3275 and Monday's close of R8.1983. Just a week ago the rand was below R8 per dollar.
It was bid at R10.6094 to the euro from R10.6089 before, and at R13.2033 against sterling from R13.1975 previously.
The euro was bid at US$1.2694 from Thursday's close of $1.2694 and Wednesday's close of $1.2721.
"The outlook remains cloudy and uncertain as when Greece exits the euro, the fear is that Spain, Portugal and Italy may be next," another trader said.
Dow Jones Newswires reported that the cost of insuring Spanish sovereign debt against default hit yet another record high on Friday, rising 12 basis points from Thursday's close to 562 basis points as its banking system is under severe stress, undermining investors' confidence and threatening to once again push the country's borrowing cost to unsustainable levels.
Late on Thursday, Moody's Investors Service downgraded 16 Spanish banks, adding to the gloom surrounding the embattled country's banking system.
The Spanish government had to intervene on Thursday during the day and deny reports of a bank run at Bankia, the domestic lender nationalised last week.
The cost of overhauling Spanish banks, some of them in great difficulty after lending excessively during a real-estate boom before the financial crisis hit, is of concern to investors and threatens to prove too much for the country, already battling high public deficit levels amidst a recession and high unemployment.
Nervous investors are pushing the credit default swaps (CDS) levels of other European countries to wider levels, as the consequences of a possible Greek exit from the eurozone are not quantified yet but are feared to be highly disruptive.
Credit default swaps are derivatives that function like an insurance contract for debt. If a borrower defaults, sellers compensate buyers.
Bonds perk up; eye rand
South African bonds were a few basis points firmer in midday trade on Friday, as the rand - which was off the day's worst levels - provided a boost to the market.
"This seems to be to do with the rand looking a bit better but I don't understand why that is the case - this market shouldn't be here considering all the risk that is in the system.
"It looks like the market is talking rate cuts the way we're going. We are being led by the swap space," a trader said.
At 11:50, the benchmark R157 bond was trading at 6.380 percent, from Thursday's close of 6.440 percent. The R207 was trading at 7.630 percent from a previous close of 7.620 percent and the R186 was trading at 8.250 percent from its close of 8.295 percent.