The South African rand recovered slightly early on Friday as the dollar dipped, but was on course for weekly losses of 2% after the country's central bank signalled a gradual pace of policy tightening and expectations grew for aggressive rate hikes in the U.S.
On Thursday, the South African Reserve Bank (SARB) raised its main lending rate in a "measured" move it said should tame inflation risks.
At 0643 GMT, the rand traded at 15.4350 against the dollar, around 0.4% stronger than its previous close. The dollar was down about 0.1% against a basket of currencies.
The rand fell around 1% on Thursday, after the SARB's 25-basis-point repo rate increase in line with economists' expectations.
"The accompanying forward guidance was somewhat less hawkish than the market had positioned for. Not only did one of the five monetary policy committee members vote for an unchanged rate, but the bank's repo-rate forecasts for the coming two years were revised lower," ETM Analytics said in a research note.
"Heading into the weekend, the rand is expected to trade at the mercy of the dollar and broader market sentiment."
Later on Friday, South Africa will auction inflation-linked bonds and Treasury bills. December budget figuresI are due around 1200 GMT.
The government's benchmark 2030 bond was a touch firmer in early deals, with the yield falling 1.5 basis points to 9.32%.
(Reporting by Alexander Winning; Editing by Shailesh Kuber)