The South African rand regained some ground on Wednesday as China's response to U.S. House Speaker Nancy Pelosi's visit to Taiwan was not as severe as some in financial markets had feared.
Pelosi's visit has caused an escalation in tensions between the United States and China, which views Taiwan as a breakaway province, triggering a sell-off in risk-sensitive currencies like the rand on Tuesday.
China demonstrated its anger with a burst of military activity, and by summoning the U.S. ambassador and halting several agricultural imports from Taiwan. But demand for safe-haven assets eased on Wednesday, providing some respite to the rand.
At 0730 GMT, the South African currency traded at 16.6800 to the dollar, nearly 1% stronger than its previous close. On Tuesday it lost almost 2%.
Also providing support to rand assets in a relatively light week for domestic economic data, a purchasing managers' index survey showed South African private sector activity expanded for the third month in a row in July.
The South African government's benchmark 2030 bond was slightly weaker in early deals, with the yield up 2 basis points to 10.365%. (Reporting by Alexander Winning Editing by Mark Potter)