The rand bounces back after Turkey-linked slump

The rand gained more than 1% early on Tuesday, bouncing back from a two-year low struck a day before, when investors dumped emerging market assets because of fears over the Turkish economy.

At 06:10 GMT, the rand traded at 14.22 versus the dollar, 1.3% stronger than its close on Monday.

Government bonds were also stronger in early deals, as the yield on the benchmark government bond maturing in 2026 fell 8 basis points to 8.97%.

The rand, one of the most deeply traded emerging market currencies worldwide, fell more than 10% early on Monday before recovering to end the day around 2.3% weaker.

The magnitude of the rand’s slide caught the South African Reserve Bank by surprise, but a deputy governor at the bank told Reuters that the regulator was “nowhere near” intervening to support the currency.

The Turkish lira, which is down around 45% against the dollar this year, edged up on Tuesday after the country’s central bank pledged to provide liquidity.

The rand is down around 13% against the US currency this year.

Analysts have highlighted South Africa‘s narrower current account deficit and smaller stock of short-term external debt than Turkey as reasons why investors should not be overly concerned by recent rand weakness at a time of dollar strength.