JOHANNESBURG: The rand weakened on Thursday to its lowest level against the dollar in a week after a contraction in the China's manufacturing sector hit investor sentiment towards emerging market currencies.
The rand was almost a percent weaker at 8.3338 at 0632 GMT against the dollar, from Wednesday's New York close of 8.3370, earlier in the session it hit a week high at 8.3530.
Bonds yields were little-changed ahead of a central bank interest rate decision due after 1300 GMT. Twenty-five of 28 economists polled by Reuters said they expected rates to be left unchanged at their 40-year low of 5.0 percent.
Also contributing to the rand weakness were fears that a wage settlement that ended a deadly strike at Lonmin's Marikana mine is prompting other workers in the platinum belt to demand similar deals.
Manufacturing in China contracted for the 11th month in a row in September, according to an HSBC survey of factory managers that indicated the world's second-largest economy remains on track for a seventh quarter of slowing growth.
"The rand weakened overnight just on the back of the Chinese manufacturing data coming in again at sub 50," said Brigid Taylor, head of institutional sales at Nedbank.
"The data just signifies that the Chinese economy is not growing to the extent that we expecting."
Fixed income dealers traded cautiously, waiting to pick up the tone from the Reserve Bank's monetary policy statement later this afternoon.
Yields on the benchmark bonds were little-changed, with the three year bond slipping half a percent to 5.4 percent and the longer-dated 14-year issue losing one basis point to 7.485 percent.
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