South Africa's rand retreated on Thursday after the Federal Reserve signalled it may lift interest rates at its next policy meeting, reigniting fears that the move would trigger capital outflows from emerging markets.
At 0645 the rand slipped 0.11 percent to 13.7300 per dollar, having fallen as far 13.8025 as most emerging currencies fell on revived bets of a U.S. rate hike by year end.
Yields on government bonds rose, with the benchmark paper due in 2026 adding 8.5 basis points to 8.395 percent after rallying to a one-week low in the previous session.
The U.S. Fed kept interest rates unchanged on Wednesday but hinted strongly at a December hike, lifting the dollar to a 2 1/2-month high against a basket of currencies.
"EM currencies will once again bear the brunt of investor sentiment and the rand will not be left untouched," Standard Bank chief trader Warrick Butler said.
Offshore risk would come from U.S. growth data for Q3 later in the session. Traders expected the figures to show momentum in the world's number one economy, bolstering the case for a December rate hike by the Fed.
"A stronger-than-expected number should be priced in if one presumes the Fed already had it heading into their 2-day meeting," Butler said.
Locally, September credit and money supply data showed demand slowing more than expected, further signs of subdued economic activity in Africa's most advanced economy.
At 0930 GMT Stasts SA publishes September producer inflation figures for September.