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UPDATE 1-South African rand gains sharply on Fed chair comments

(Updates to reflect afternoon trade)

JOHANNESBURG, Feb 23 (Reuters) - The South African rand gained sharply on Tuesday afternoon after Federal Reserve Chair Jerome Powell said the U.S. economy needed support for “some time,” comments that hurt the dollar.

The prospect of ongoing support by the central bank of the world’s largest economy is positive for emerging markets like South Africa.

The rand reacted little to data from Statistics South Africa showing the official unemployment rate rose to 32.5% in the fourth quarter of last year, up from 30.8% in the previous three months.

At 1540 GMT, the rand traded at 14.5750 against the dollar, almost 0.8% firmer than its previous close.

On Wednesday, market attention will turn to the state of South Africa’s public finances when Finance Minister Tito Mboweni delivers his budget speech in parliament.

A Reuters poll published last week showed South Africa’s fiscal deficit is expected to narrow this year because of an economic rebound, but the long-term trend of higher debt remains unchanged due to the COVID-19 pandemic and pressures like loss-making state-owned enterprises.

Stocks fell on the Johannesburg bourse on Tuesday, mirroring falls elsewhere in global equities before Powell spoke.

The Top-40 index ended down 2.3% at 60,494 points, while the All-share index fell 2.1% to 65,922 points. (Reporting by Olivia Kumwenda-Mtambo and Alexander Winning Editing by Susan Fenton)

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