Yesterday, the South African rand and other high yield currencies weakened against the US dollar, after the US Federal Reserve minutes suggested that the central bank might slow or stop buying bonds sooner than expected.

The yield on benchmark government bonds fell yesterday. The yield on the 2015 bond fell to 5.30%, while that for the longer-dated 2026 issue declined to 7.20%. Data indicated that consumer price inflation in South Africa surprisingly eased to 5.4% in January, which is within the South African Reserve Bank’s target range of 3.0% to 6.0%.

At 06:00 SAST, the US dollar is trading marginally lower against the South African rand at R8.9074, while the euro is trading 0.1% lower at R11.8218. Yesterday, the euro weakened against most of the major currencies, amid concerns about the eurozone economy, following a nationwide anti-austerity strike in Greece and weak eurozone consumer confidence and Italian industrial orders data. Yesterday, the British pound weakened against its major peers, after minutes of the Bank of England latest policy meeting showed that more officials voted to expand asset purchases and are considered lowering the benchmark interest rate. Moreover, data showed that the unemployment rate in the UK rose in December.

At 06:00 SAST, the euro slipped 0.1% against the US dollar to trade at $1.3273, while it is trading flat against the British pound at GBP0.8716.

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