Rand falls as China devalues currency

Johannesburg – The rand fell sharply early on Tuesday along with fellow emerging market units after China devalued its currency to support a stuttering economy.

At 06:30 GMT the rand weakened 0.53% to R12.7250/$, not far off the previous week's 14-year low of R12.8300.

"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 R12.80 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.

Stats SA publishes monthly factory production numbers at 11:00 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%.

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