Johannesburg - South Africa's rand extended losses against the dollar on Wednesday, keeping in step with its emerging market peers even as local inflation data suggested the central bank may hike interest rates next month.

Emerging markets, depressed by poor Chinese factory data and an escalating geo-political crisis in Ukraine, saw its currencies trade lower against the dollar in the session.

At 17:25 SA time, all but two emerging market currencies tracked by Reuters were weaker against the dollar, with the rand taking the second biggest loser spot after Indonesia's rupiah.

The local unit gave up nearly 1 percent to trade at a session low of 10.6265 to the dollar in the afternoon session.

The next support area for the currency should come in at the April 4 low around 10.6600, and 11 rand levels from earlier in the year are still on the cards.

The weak rand helped to push consumer prices in March to the top of the central bank's 3-6 percent target band on a year-on-year basis, with core inflation also rising after months of no change.

The monthly increase in CPI was the largest in over 5 years, official data showed earlier.

“The effects of a weak rand and rising local food prices mean it is likely to accelerate further over the next six months or so. This should be enough to prompt the central bank into further tightening, and an interest rate hike seems likely at its next MPC meeting in May,” said Shilan Shah of Capital Economics.

The rand has stabilised since hitting 5-year lows in January, but external risks to emerging markets could combine with domestic worries about mining strikes to take the rand back to those levels, analysts said.

South African platinum producers are in the second day of official talks aimed at ending a three-month strike at their mines, after making a new wage offer to the striking AMCU union.

Government bonds fell to the session's low after the higher-than-expected inflation data.

The yield on the benchmark 2026 issue climbed to 8.57 percent, while the 2015 note rose to 6.9 percent, levels last seen nearly a month ago. - Reuters