South Africa’s rand falls as hawkish Fed lifts dollar

JOHANNESBURG, Jan 6 (Reuters) – South Africa’s rand weakened early on Thursday, as minutes of the U.S. Federal Reserve’s December meeting signalled quicker interest rate hikes, denting sentiment for riskier assets.

At 0610 GMT, the rand traded at 15.9450 against the dollar, 0.19% weaker than its previous close.

Fed officials said the “very tight” U.S. labour market might warrant raising rates sooner, and indicated they could also reduce the central bank’s overall asset holdings to tame high inflation – a process dubbed quantitative tightening (QTR) -minutes of their Dec. 14-15 policy meeting showed. read more

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The news lifted the dollar. read more

Higher rates in developed markets tend to drain capital from higher-yielding but riskier emerging markets such as South Africa, weighing on their currencies.

Government bonds also weakened, with the yield on the 2030 maturity adding 7.5 basis points to 9.46%.

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Reporting by Olivia Kumwenda-Mtambo; Editing by Subhranshu Sahu

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