Cape Town - The rand weakened for a third day, heading for its second straight five-day drop as foreign investors dumped the most South African bonds in eight months amid a selloff in emerging-market currencies.

The rand joined the Turkish lira and Argentinian peso in the tumble yesterday.

That extended the decline triggered last year when the Federal Reserve first indicated it would scale back stimulus, signaling investors may be losing confidence in some of the biggest developing nations.

Foreign investors sold 4.4 billion rand ($400 million) of South African bonds yesterday.

“Global markets have suffered a severe bout of risk aversion,” John Cairns, a currency strategist at Rand Merchant Bank in Johannesburg, said in an e-mail.

“The risk is that the rand has reattached to other troubled emerging-market currencies. Practically, this means that if the lira runs again, the rand could be dragged in its wake.”

The South African currency retreated 0.3 percent to 11.0282 per dollar by 10:46 a.m. in Johannesburg, bringing its decline this week to 1.5 percent.

Yields on benchmark rand bonds due December 2026 were little changed at 8.5 percent after rising 10 basis points yesterday to the highest level since September.

The rand slumped to a five-year low yesterday, breaching 11 per dollar for the first time since the collapse of Lehman Brothers Holdings Inc.

That came after a report from HSBC Holdings Plc and Markit Economics indicated that China’s manufacturing may contract for the first time in six months, adding to concern that growth is losing momentum.

China is the biggest buyer of South African raw materials.

As well as the bond sales in Africa’s biggest economy, investors abroad sold 216 million rand of equities yesterday, according to data from the Johannesburg Stock Exchange. - Bloomberg News