Rand hits 4-week low in risk averse trade

Johannesburg - The rand slumped to a new month low versus the dollar on Wednesday, influenced mainly by weak stock markets in China, a key importer of South African commodities.

The local unit fell to R12.5415/$ in early Johannesburg trade, its weakest since June 9 according to Thomson Reuters data.

By 08:51 it was 0.68% softer at 12.5350 compared with Tuesday's close.

Government bonds were relatively stable, with the benchmark instrument due in 2026 edging up just 1 basis point to 8.295%.

Although investors are worried about sluggish growth in the economy, beset by its worst electricity crunch in seven years, local markets have mainly been driven by global headlines in recent weeks.

With investors already wary of the global impact of Greece's debt crisis, a slide in China's stock market has added to overall risk aversion.

"Dollar gains have been the major driver of dollar/rand upside this week," said Rand Merchant Bank analyst John Cairns said.

"A sustained break in euro/dollar below 1.10 will result in dollar/rand testing new cyclical highs."