JOHANNESBURG, April 16 (Reuters) – South Africa’s rand weakened early on Friday, after a rally the day before that took it to its best level in 15 months as falling yields in the United States drove global demand for risk assets.

At 0700 GMT, the rand was down 0.14% at 14.1975 per dollar compared with an overnight close of 14.1725. On Thursday, it broke through a number of technical levels on its way to 14.1550, its strongest since January 2020.

“While the ZAR’s strength of late has largely been founded on SA’s trade surplus, the high real yields the country offers have also come back into play amid improving global risk appetite and falling UST yields,” said economists at ETM Analytics.

The benchmark 10-year U.S. Treasury yield dipped to a one-month low, moving further away from the one-year high it touched last month that rattled emerging markets.

Bond and foreign-exchange markets seem willing to give the Federal Reserve the benefit of the doubt that inflation pressure will be transitory and monetary stimulus will remain in place for years to come, a boost for high-yield assets like the rand.

Bonds were also weaker, with the yield on the benchmark 2030 government issue up 5.5 basis points to 9.160%. (Reporting by Mfuneko Toyana, editing by Larry King)

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