The South African rand slipped in early trade on Thursday, tracking most emerging market assets ahead of the release of a local purchasing managers' index (PMI) and November production figures for the manufacturing sector.

At 07:02 GMT the rand traded at 16.4875 against the dollar, down about 0.3% after a 0.5% decline on Wednesday as markets weighed up intensifying geopolitical tensions and US data for clues on future monetary policy.

"Many in the market have turned their focus to valuations, which they felt were unsustainable," ETM Analytics said in a note.

Central bank data earlier showed that the country's net foreign reserves rose to $71.14 billion at the end of December from $70.02 billion in November.

Lost ground

While the rand has lost some ground, sentiment towards South Africa continues to be positive, which should ensure that it remains on the firmer side.

South Africa's benchmark 2035 government bond was weaker in early deals, with the yield rising by 2.5 basis points to 8.315%.