(Adds latest prices, latest figures)
JOHANNESBURG, Dec 19 - South Africa's rand firmed against the dollar on Thursday, clinging to gains as a high carry yield and a decision by Fitch not to lower the country's credit rating underpinned demand.
At 1500 GMT the rand was 0.22% firmer at 14.2880 per dollar from an opening level of 14.3050.
Fitch on Wednesday affirmed South Africa's long-term foreign and local currency debt ratings, helping lift the rand to a four-and-a-half month high against a backdrop of mildly positive global sentiment.
The rating agency sounded a cautionary note about the bailouts of state firms, however, saying the government needed to quickly implement a plan to cut debt and expenditure, with notable progress expected by February when the treasury publishes its annual budget.
"The February budget event risk seems to be leading to a far more consolidative environment," said economists from ETM Analytics in a note.
"In this context South Africa's high yields seem to be driving some outperformance in the spot markets as carry traders seem to be capitalising in the short term."
Stocks ended a three-day winning streak, with Ascendis Health ASCJ.J leading the decliners.
Shares of the health and pharmaceuticals group hit their lowest this year, closing down 17.47% at 1.37 rand, after it failed to agree terms with a preferred bidder for the disposal of its Remedica business in Cyprus. benchmark JSE Top-40 Index .JTOPI was down 0.38% at 51,268 points while the broader All-Share Index .JALSH was down 0.36% at 57,558 points.
Other emerging market equities also retreated on Wednesday as investors took cash off the table in the run-up to the Christmas holiday season. EMRG/FRX
Bonds firmed, with the yield on the 2026 government paper ZAR186= down 0.5 basis points at 8.28% while the yield on the 2030 ZAR23030= instrument fell 4 basis points to 9.06%.
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