UPDATE 1-South Africa assets undermined by dollar rally, stocks, rand sink

(Updates with closing prices)
JOHANNESBURG, March 23 (Reuters) - South African assets were
undermined on Wednesday by a resurgent dollar, which knocked the
rand and sent precious metals prices lower, taking the shares of
producers down with them.
The dollar strengthened following hawkish comments by
Federal Reserve officials on the path of U.S. interest rates,
sending spot gold XAU= over 2 percent lower to four-week lows
of $1,222.00 an ounce while platinum XPT= sank over 3 percent.
Higher interest rates increase holding costs of gold, which
is a non-interest bearing asset.
Impala Platinum IMPJ.J tumbled 11.3 percent to 42.97 rand,
the biggest decliner of the day. Rival Lonmin LONJ.J also shed
over 11 percent while Anglo American (LON:AAL) Platinum AMSJ.J lost 7.75
percent to 359.50 rand. Sibanye Gold SGLJ.J fell over 6
percent to 54.56 rand.
Kumba Iron Ore KIOJ.J lost over 9 percent to 77 rand after
Deutsche Bank (DE:DBKGn) cut its target price to 65 rand from 105 rand.
"We continue to forecast weak Chinese steel demand in 2016,"
the bank said in its commodities quarterly this week, painting a
bleak outlook for the product iron ore is ultimately used for.
Johannesburg stocks fell for a second straight session, with
the benchmark Top-40 index .JTOPI closing 1.49 percent lower
at 46,613.13. The wider All-share index .JALSH lost 1,54
percent to 52,569.55.
South Africa's rand also weakened on Wednesday, with
inflation data supportive of further rate hikes failing to
offset the impact of broad-based dollar strength.
Traders and analysts said the currency remained vulnerable
due to uncertainty over domestic fiscal policy, after a senior
government official said a family linked to President Jacob Zuma
had a hand in the December firing of the finance minister.
The rand ZAR=D3 fell about 10 percent against the dollar
after Nhlanhla Nene's dismissal, and has remained wobbly amid
fears that his successor Pravin Gordhan does not enjoy Zuma's
backing.
At 1520 GMT on Wednesday, the rand traded 0.8 percent softer
at 15.3500/dollar compared with Tuesday's close.
Government bonds were similarly weaker, nudging the yield
for debt due in 2026 ZAR186= 2 basis points higher to 9.325
percent.
The rand had briefly rallied earlier on Wednesday, after
official data showed headline inflation quickened to 7 percent
in February, its highest in nearly seven years, suggesting the
central bank will have to raise interest rates further.
But worries about political interference on economic policy,
which have fed fears of a credit rating downgrade, are likely to
weigh on the currency.
"We see the rand struggling to hold onto gains into the
middle of this year, but largely due to domestic factors rather
than international developments," said analysts at Standard
Bank.