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Rand slips as US inflation points to Fed rate hike

At 1420 GMT the unit edged 0.2 percent weaker to 11.8660 per dollar.

FILE: Government bonds tracked the currency weaker as yields rose. Picture: Christa Eybers/EWN

JOHANNESBURG - The rand slipped against the dollar on Friday as US consumer inflation edged up, boosting the likelihood of a rate hike by the Federal Reserve later this year.

At 1420 GMT the unit edged 0.2 percent weaker to 11.8660 per dollar, wiping out gains that saw it break through the 11.75 technical barrier for the first time in three weeks following a hawkish policy statement by the central bank on Thursday.

"The USD-ZAR test to 11.7300 yesterday highlights the risk of a downside break on the pair, but the failure to hold these levels confirms strong support around 11.7600/7800," economists from ETM Analytics said in a note.

Government bonds tracked the currency weaker as yields rose, with the benchmark paper due in 2026 adding 9 basis points to 8.05 percent.

"Their CPI numbers came in a touch higher than expected. This led to the rand weakening, and as such bonds followed," said Dale Forssman, a bonds trader with World Wide Capital Securities, referring to the US inflation data.

Headline inflation in the world's largest economy rose 0.1 percent in April after increasing 0.2 percent in March, with the uptick in spending activity reviving views of a lasting recovery in the US.