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JOHANNESBURG – The rand was flat against the dollar yesterday and is likely to trade rangebound this week ahead of a central bank interest rate decision on Thursday. The rand was at R9,9775/$ at 08:51, in line with its close in New York on Friday. The South African Reserve Bank is expected to keep its repo rate unchanged at 5percent at the end of its policy meeting on 18 July and the rand is likely to hold steady amid cautious trading in the next few days.

US Federal Reserve (Fed) chairperson Ben Bernanke is also due to address Congress tomorrow and Wednesday, which could shed further light on the tapering of the bank’s stimulus programme.

A slowdown in the Fed’s bond purchases and a strengthening of the dollar could keep the rand vulnerable in the medium term, analysts say.
“The rand looks stuck within a R9,85 to R10,30/$ range for the time being,” Absa Capital wrote in a note.

“With the Fed likely to start normalising policy towards the end of the quarter, with an associated expected slowing in capital inflows towards emerging markets, the risk lies in the local unit rising back to the top of this range, possibly as high as R10,50/$ over the coming months.”

Government bonds were barely changed, with the yield on the 2026 issue up 1 basis point at 8,025 percent  and that on the 2015 paper down half a basis point at 6,11percent. — Reuters