The South African rand edged higher in early trade on Wednesday after state power company Eskom and trade unions cited progress in talks to end a strike that has caused the country's worst power cuts in more than two years.

At 0708 GMT, the rand traded at 16.0700 against the dollar, up 0.12% from its previous close.

But analysts said the rand was still vulnerable to dollar moves on global markets and developments in the country's power crisis.

"Further dollar strength and Eskom woes could see the rand test R16.20 in the short term," Andre Cilliers, currency strategist at TreasuryONE, said in a research note.

Eskom implemented so-called "Stage 6" power cuts on Tuesday after 10 of its generation units went offline and the strike hampered efforts to bring them back online.

Many employees were returning to work on Wednesday, with no reported incidents of protest so far, an Eskom spokesperson said in a statement.

On the Johannesburg Stock Exchange, the Top-40 index was down 1.22%, while the broader All-share index fell 1.21% in early trade.

The government's benchmark 2030 bond was slightly higher in early deals, with the yield down 3 basis points to 10.405%. (Reporting by Bhargav Acharya in Bengaluru; Editing by Kenneth Maxwell)