March 25 Reuters South Africas rand pared early gains on Thursday after the central bank kept interest rates unchanged, while a stronger dollar put an index of emerging market currencies on track for its longest losing streak this year.

The rand was up 0.2 as the South African Reserve Bank SARB kept its key lending rate unchanged at 3.5, as widely expected, with governor Lesetja Kganyago saying inflation was expected to be well contained in 2021.

The highyielding currency, which has also come under pressure this month from rising U.S. bond yields, was up about 0.5 before the rate decision.

Focus turns to Mexicos central bank policy outcome later in the day, with signs of quickening inflation raising expectations that the bank will hold interest rates. The Mexican peso was up about 0.3.

Earlier, the Philippine central bank kept key interest rates steady, balancing the need to support an economy facing renewed challenges from fresh coronavirus curbs with concerns about rising inflation. The peso was flat.

The MSCI index of developing world currencies fell about 0.3 to a twoweek low as expectations of stronger U.S. economic growth, rising U.S. bond yields and new COVID19 lockdowns in Europe lifted the dollar.

A stronger dollar will dampen demand for emerging markets commodities and make their dollardenominated debt challenging to service, especially with rising longerterm interest rates, said Hussein Sayed, chief market strategist at FXTM.

So far, this risk seems…