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Rand likely to stay in range

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Johannesburg — The rand regained some ground on Friday, supported by offshore demand and renewed weakness in the dollar, with traders predicting a few rangebound sessions ahead of this week’s interest rate decision.

By 5pm on Friday, the rand had inched up 0.87c on the day to be bid at R5.801 to the dollar, off its worst level of the day at R5.89.

Traders said the dollar’s negative reaction to weak US non-farm payrolls data bolstered the domestic unit, but markets would be wary ahead of this week’s monetary policy meeting.

A Reuters poll showed 16 of 19 analysts believed the Reserve Bank would hold its repo rate at 7.5 percent, given domestic demand and growth.

«People will be wary of the central bank cutting rates — it’s not that predictable,» a London-based trader said. «In the meantime we will probably trade between R5.76 and R5.89 to the dollar.»

On Friday the euro passed $1.34 for the first time as dealers reacted with disappointment to report on the US labour market, which created just 112 000 jobs in November. Economists had been expecting 200 000 new jobs.

«This is the weakest pace of job growth in four months,» said Kathy Lien, the chief strategist at Forex Capital Markets.

Domestic bonds weakened on Friday, with the yield on the R194 bid 7.5 basis points softer at 7.88 percent. The R153 was 5 basis points softer at 8.22 percent.

By Reuters and AFP

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