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South Africa’s rand weakens as investors bet on U.S. growth

PUBLISHED: Thu, 01 Apr 2021 06:55:40 GMT

JOHANNESBURG, April 1 (Reuters) – South Africa’s rand weakened early on Thursday as growing bets on faster growth in the United States continued to strain demand for emerging market assets.

At 0630 GMT the rand was 0.37% weaker at 14.8200 per dollar, giving up some of the gains of the previous session that saw it soar to a best of 14.7225 as yield-seeking investors were cheered by a bigger-than-expected trade surplus.

Rising U.S. Treasury yields and a rebound in the dollar spurred by President Joe Biden’s fiscal stimulus plan and vaccination rollout has put risk demand under pressure, although the rand continued to find takers.

On Thursday the dollar held near a multi-month high against other major currencies.

“US President Biden’s announcement of a $2 trillion infrastructure plan yesterday is expected to support the reflation trade into the weekend, which means yesterday’s EM currency recovery may be short-lived,” said economists at ETM Analytics.

Bonds also weakened, with the yield on the benchmark 2020 paper up 3 basis to 9.515%. (Reporting by Mfuneko Toyana; editing by Jason Neely)

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