JOHANNESBURG (Reuters) - South Africa's rand was softer against the dollar in nervous trading on Wednesday as global markets awaited the outcome of a U.S. Federal Reserve meeting that could mark the start of a scale down in its monthly asset purchases.
Government bonds were unchanged from overnight closing levels and the yields for the benchmark 2026 note and the 2015 paper were flat at 8.205 percent and 6.075 percent respectively.
The debt market has been propped up mainly by local demand in recent weeks, with the latest data from the Johannesburg Stock Exchange showing offshore investors continuing to sell local debt last week.
The rand was at 10.3570 to the dollar by 0657 GMT, down 0.26 percent from Tuesday's close.
The local unit tracked a general retreat by emerging market currencies, hours before the Fed announces whether it will immediately start reducing its monetary stimulus which has been a key source of dollar inflows into these markets.
Analysts are divided on the expected timing of the tapering, with a large number predicting the U.S. central bank will defer the move to either January or March next year.
"Given that the market remains heavily divided as to the possible outcome, we could still see some volatility across major currency markets," said Tradition Analytics in a note.