JOHANNESBURG: The South African rand retreated early on Tuesday as caution lingered in markets after the discovery of a COVID-19 variant that is spreading in the country and globally.

At 0625 GMT, the rand traded at 16.2150 against the dollar, 0.46% weaker than its previous close.

The currency plunged to its weakest since October 2020 on Friday as the world reacted with alarm to the news of the new variant, Omicron, which was first detected in southern Africa.

"The short-term technical indicators remain in overbought territory, but caution is advised, as headlines remain significant market drivers and liquidity is limited," analysts at Nedbank said in a note.

A South African infectious disease expert said on Monday that the country's COVID-19 infection rate could triple to more than 10,000 by the end of this week as the Omicron variant spreads rapidly. But little is known yet about the new variant.

In fixed income, the yield on the benchmark 2030 maturity dipped 2 basis points to 9.84% in early deals.