South Africa’s rand recovered slightly early on Tuesday after touching a fresh 14-year in the previous session as emerging markets wobble on concerns over China’s economy.
At 0630 GMT the rand edged 0.18 percent firmer to 12.5945 per dollar, recovering from a low of 12.69 on Monday when the unit failed to breach the key 12.70 technical support.
“Worth noting that the last time the rand traded at these levels, the ensuing correction saw us revisit 12.0550 before the bull trend resumed,” said Oliver Alwar of Standard Bank.
Chinese equity markets plunged by their most in 8 years on Monday, threatening to drag emerging markets with them as appetite for riskier assets suffered, a day ahead of a U.S. Federal Reserve monetary policy announcement.
Bets that the U.S. central bank will lift rates in September have seen the greenback rally, and in early trade the dollar index had ticked 0.15 percent firmer.
The rand may struggle to hold on to the gains, according to traders, with unemployment, trade and government budget data due in the week posing some downside risks.
Yields on government bonds fell, with the benchmark issue due in 2026 dropping 1 basis point to 8.19 percent.