Government bonds extended the previous day's gains as relatively higher yields gave local debt the edge over bonds in developed economies.

By 0639 GMT the rand was at 6.7025 to the dollar, up 0.15 percent from Tuesday's 6.7125 close. The rand briefly touched 6.70 earlier on Wednesday, its strongest level since June 9 according to Reuters data.

"It's all about the weaker dollar at the moment, risk seems to be back on for now," a currency dealer in Johannesburg said.

Analysts said emerging market assets were in favour for the moment after a vote in confidence in the government in debt-ridden Greece helped boost risk appetite.

Government bonds extended Tuesday's gains, pushing the yield on the four year bond and that for the longer-dated 2026 note three basis points lower to 7.44 percent and 8.52 percent respectively.

"The statistics yesterday showed us that the foreign accounts were very involved in our market and they bought about two billion rand worth of stock, and that is probably still filtering in today as well," a bond trader said.

"The 10-year U.S. Treasury is at 2.98 percent and our 10-year is around 8.36 percent, so obviously there's a spread to be gained there. As long as interest rates in the U.K. and the United States remain at these levels, South African yields will continue to be attractive."

The local share market looked set to open largely flat at 0700 GMT, with the September futures contract up just 0.29 percent ahead of the start of trade.

Copyright Reuters, 2011