South Africa's rand retreated on Wednesday hours before the scheduled release of inflation data as low liquidity combined with renewed growth concerns to halt the currency's short-lived rally.
By 0645 GMT the rand had weakened 0.6 percent to 16.8750 per dollar, surrendering gains of the previous session that saw the unit reach 16.5750 on the back of hopes that China would unleash more stimulus programmes as growth there stalled.
Yields on government bonds rose in early trade, with the benchmark paper due in 2026 adding 6 basis points to 9.805 percent.
On Tuesday the International Monetary Fund (IMF) cut its growth forecast for South Africa to 0.7 percent from 1.3 percent, while also trimming global growth forecasts, citing the slowdown in China as a major concern.
Consumer inflation data for December due at 0800 GMT is expected to show prices rising, with the higher figure putting pressure on South Africa's central bank to raise interest rates when it concludes a three-day policy meeting next Thursday.
"The implication of this print on next week's MPC meeting remains high. We therefore expect the majority of today’s volatility to be centred on the announcement," said trader at Rand Merchant Bank Gordon Kerr in a note.
The South African Reserve Bank (SARB) raised benchmark lending rates twice in 2015, by 25 basis points each, saying it was concerned about inflation.
At its last policy meeting in November, the SARB said it forecast inflation would breach its upper target of 6 percent for two consecutive quarters in 2016 as an ongoing drought pushed up food prices.