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JOHANNESBURG (Reuters) - South Africa's rand was weaker against the dollar on Tuesday, pulling back from its recent gains on negative news out of Europe and as the 7.90 level posts a tough barrier for rand bulls.
The rand had fallen to 7.9655 so far in the session and was at the bottom of a basket of 20 emerging market currencies trading against the dollar tracked by Reuters.
Analysts say the local currency is lagging its peers, and is likely to play catch-up soon if it can break through the 7.90 level.
South African shares closed on a high on Monday with the All-share index posting its fifth straight record closing high, which might encourage inflows into the market and provide some support to the rand.
Trade was driven by the Greek talks to restructure their debt and worries that Portugal might be in such trouble as Greece on Tuesday.
Government bonds were nearly unchanged from their closes while dealers await the results of a bond auction at 0900 GMT.
The yield on the 2015 bond was at 6.66 percent, while that on the longer end, weakened slightly to 8.325 percent.
Treasury has offered 1.1 billion rand of the 2017 bond and 1 billion rand of the 2021 issue this week.
"There have been some notable foreign purchases of South African bonds in recent weeks and we would not be surprised if the aforementioned longer-dated scrip is well received by the foreign contingent that is once again looking for South Africa's relatively attractive yield pick-up," Absa Capital said in a note to investors.
Foreign investors bought 2 billion rand in local debt last week while still selling shares.