South African rand falls as Hawkish Fed raises dollar


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The South African Rand coins can be seen in this illustrative photo taken on September 9, 2015. REUTERS / Mike Hutchings / File Photo

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JOHANNESBURG, Jan.6 (Reuters) – The South African rand weakened Thursday morning, as the minutes of the US Federal Reserve’s December meeting pointed to faster interest rate hikes, shaking sentiment for riskier assets.

At 6:10 am GMT, the rand was trading at 15.9450 against the dollar, 0.19% weaker than its previous close.

Fed officials have said the “very tight” US labor market may justify an earlier rate hike, and said they may also cut overall central bank holdings to bring high inflation under control – a process called quantitative tightening (QTR) -minutes of their Dec. 14- 15 political meeting showed. Read more

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The news made the dollar go up. 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 to maturity 2030 increasing 7.5 basis points to 9.46%.

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Reporting by Olivia Kumwenda-Mtambo; Editing by Subhranshu Sahu

Our Standards: Thomson Reuters Trust Principles.

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