South Africa's rand still vulnerable despite rate hike

* December PPI due at 0930 GMT

JOHANNESBURG, Jan 30 (Reuters) - South Africa's rand was trading close to five-year lows on Thursday after a central bank rate hike failed to halt a sell-off in the currency of Africa's biggest economy.

The rand ZAR=D3 was at 11.2940 to the dollar at 0655 GMT, slightly firmer than its New York close on Wednesday, but not far off a trough of 11.3800 hit earlier that day.

The currency, which has been swept up in the volatility that has hit other emerging markets such as Turkey and India, slid to the five-year low on Wednesday after the first interest rate increase in nearly six years.

Reserve Bank governor Gill Marcus said the 50 basis point hike in the repo to 5.50 percent was aimed at containing inflation and had not been influenced by Turkey's decision to tighten monetary policy dramatically to support the lira.

The rand will remain vulnerable as long as the capital flight from emerging markets continues, analysts said.

The U.S. Federal Reserve's announcement on Wednesday that it would reduce its monthly bond-buying programme by a further $10 billion a month is also likely to increase the appeal of safe-haven assets.

"Despite aggressive rate hikes... emerging market currencies remain under pressure. Moreover, the rand is now at the forefront of the selling and the likely size of daily moves has spiked," said Rand Merchant Bank strategist John Cairns.

"Risks are incredibly high as we enter a new and alarming phase of what is looking more-and-more likely to become an emerging market crisis. Today will be crucial - if we see further rand losses, then a spiral out-of-control may become possible."

After sharp spikes in yields on Wednesday, government bonds were trading at multi-year lows.

The yield on the 2026 government bond ZAR186= was flat at 8.795 percent, its highest since April 2011, while that on the 2015 paper was up 4 basis points at a two-year high of 7.04 percent.

(Reporting by Tosin Sulaiman; Editing by Ed Cropley)

((tosin.sulaiman@thomsonreuters.com)(+27 11 775 3153)(Reuters Messaging: tosin.sulaiman.thomsonreuters.com@thomsonreuters.net))

Keywords: MARKETS SAFRICA/RAND