The rand was relatively stable on Thursday afternoon, but its short-term fate is tied directly to activity in global markets, which continue to be volatile.

Risk assets appear to have begun unraveling again after a broadly positive start to the day. Shares, in particular, have come under renewed pressure, leaving the rand vulnerable to further weakness.

The rand tends to be most affected by shifts in global risk sentiment because it is one of the most highly traded emerging-market currencies. It has weakened nearly 5% against the dollar so far in December, partially negating the positive effect of lower international oil prices.

The two factors play a key role in shaping the outlook on inflation, which rose to an annual rate of 5.2% in November, from 5.1% in October.

In November, the Reserve Bank raised interest rates by 25 basis points, for the first time in more than two years, citing the effect of a weaker rand-dollar exchange rate and the inflation outlook.  However, with much lower international oil prices and a sluggish economy, the outlook on inflation could moderate, thus allowing the Bank to keep rates steady in the foreseeable future.

At 3.11pm, the rand was 0.29% firmer against the dollar at R14.5128, relatively steady against the euro at R16.5081, and 0.31% stronger against the pound at R18.3388. The euro had gained 0.26% against the dollar to $1.1373.

Brent crude was down 2.8% to $53.68 a barrel, close to its lowest level in more than a year, according to Iress data.

Local bonds were steady at stronger levels, with the yield on the R186 bond last seen at 8.96%, from 8.99% on Monday.