South Africa's rand weakens ahead of key risk events

JOHANNESBURG (Reuters) - South Africa's rand weakened against the dollar on Tuesday as investors braced for easing domestic inflation numbers, an expected unchanged rates decision and more hawkish comments from the United States Federal Reserve later this week. The rand has been under heavy pressure as investors bet the Fed will affirm the U.S. economy is growing, and that the bank will signal an earlier hike in interest rates than investors had been expecting. It concludes its rate-setting meeting on Wednesday. The same day, South Africa releases data for August inflation, which investors expect to have eased. On Thursday, the Reserve Bank makes a decision on interest rates that is unlikely to support the currency, with expectations it will hold rates at 5.75 percent. The Monetary Policy Committee's starts its three-day meeting on Tuesday. At 0645 GMT, the rand was at 10.9875 to the dollar, down 0.2 percent on its close in New York on Monday. The rand fell through the psychologically key 11.0 support last week and has tested fresh lows in the past week. It is pulling back from seven month lows, with dealers saying the fall was overdone and it should take a breather before attempting new levels. Yields on government bonds rose 3.5 basis points on the benchmark issue, tracking the currency weakness, to trade at 8.285 percent on the 2026 bond.