S.African rand falls as dollar surges on Fed rate hike forecasts

(Updates prices to reflect afternoon trade)

JOHANNESBURG, Aug 19 (Reuters) - The South African rand weakened further on Friday, dragged down by a stronger dollar as Federal Reserve officials continued to talk up the need for further interest rate hikes.

At 1529 GMT, the rand ZAR=D3 was trading at 17.0275 against the dollar, down 0.89% from its previous close.

The rand has now lost more than 5% against the dollar this week as the U.S. currency has forged higher on global markets.

A string of U.S. central bank officials said on Thursday that the Fed needs to keep raising borrowing costs to tame decades-high inflation, even as they debated how fast and how high to lift them.

A surprise fall in local retail sales in June ZARET=ECI and power cuts by struggling state-owned power utility Eskom have also weighed on the rand this week.

"The rand and other emerging market currencies remain highly vulnerable to shifts in global market sentiment," Investec analyst Lara Hodes said in a research note.

But next week the local data calendar includes July consumer ZACPIY=ECI and producer ZAPPIY=ECI inflation, second-quarter unemployment ZAUNR=ECI and a leading business cycle indicator ZALEAD=ECI .

Shares on the Johannesburg Stock Exchange (JSE) fell, mirroring the fall in global equities as rate hike worries and fears of recession sapped risk appetite.

Overall on the JSE, the All-Share index .JALSH ended down 1.82%, while the Top-40 index .JTOPI closed 1.89% lower.

The South African government's benchmark 2030 bond ZAR2030= fell, with the yield up 14 basis points at 10.325%.
Reporting by Alexander Winning and Bhargav Acharya Editing by Mark Potter and Nick Macfie

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