Johannesburg - South Africa's rand inched up in early trade against the dollar on Tuesday despite data showing that China's manufacturing sector is in its worst slump in several years, raising fresh fears of an economic slow down.
Stocks look set to open at least 495 points lower as equity futures on South Africa's blue-chip Top-40 index, which often act as a precursor of the actual index, fall 1.12 percent.
At 06h43 GMT the rand was 0.06 percent firmer to 13.2725 per dollar, extending small gains after tumbling to an all-time low of 14.00 last week.
“The rand and other risk currencies are making slow gains but the ongoing concerns over China and the Fed and the renewed losses in the equities markets suggests the pressure will switch to weakness,” said John Cairns a currency strategist at Rand Merchant Bank.
The Chinese official PMI figure for August added to the negativity surrounding its economy, with the figure coming in at an expected 49.7, a three-year low, signalling a continued downside risk in the world's largest metals consumer.
With a weaker equity market and falling commodity prices in China, South Africa's largest importer, risk aversion continued to prevail and hit resource-heavy currencies such as the rand.
Risky assets had earlier been dumped by investors ahead of the Federal Reserve meeting due to take place on September 16-17, which could result in them loosing money during volatility.
“Given this backdrop, it is a little strange that risk currencies continue to gain and we would suggest caution in thinking this will continue,” said Cairns.
The yield for the 2026 benchmark was flat at 8.365 percent.
