South Africa's rand dragged lower after China devalues currency - CNBC Africa

South Africa's rand dragged lower after China devalues currency

Southern Africa

by Reuters 0

South Africa's rand dragged lower after China devalues currency. PHOTO: Money 101

South Africa's rand fell sharply early on Tuesday along with fellow emerging market units after China devalued its currency to support a stuttering economy.

At 0630 GMT the rand weakened 0.53 percent to 12.7250 per dollar, not far off the previous week's 14-year low of 12.8300.

"The effect on emerging market/high-yielding currencies was quite strong this morning," trader Warrick Butler of Standard Bank said in a note to clients.

A move below the 12.80 support level was however unlikely, Warrick added, as negativity had already been priced into risky emerging market assets.

China's yuan denomination slipped to a three-year trough following the devaluation, with currencies in Asia and emerging markets following suit.

South Africa's statistics agency publishes monthly factory production numbers at 1100 GMT, with economists polled by Reuters expecting the figures to show a further contraction in industrial output.

Yields on government bonds were lower, with the benchmark issue due in 2026 shedding 1 basis point to 8.165 percent.

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