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Johannesburg - South Africa's rand firmed to a 14-month high against a beleaguered dollar on Wednesday and got added support from central bank Governor Tito Mboweni's comments indicating interest rates would stay on hold next week.
The rand was trading at R7.27 against the dollar at 08:35, 0.63 percent firmer than Tuesday's New York close of R7.3160. It briefly hit R7.25, its firmest level since August 2008.
"The euro is looking well-bid, commodities are higher and the dollar index has broken through crucial support. I'd say all factors point to a lower dollar/rand over the next couple of days," said a dealer at a local bank.
Mboweni said late on Tuesday monetary authorities had offered "sufficient" policy accommodation to help pull the economy out of a "mild" recession.
Absa Capital said in a note Mboweni's comments were supportive of the view that the central bank will leave the repo rate on hold at 7.0% next week, after cutting rates by a cumulative 500 basis points since December.
The dollar slid to its weakest level in 14 months against a basket of currencies on expectations of continued low US interest rates and investor bets on commodity currencies.
The euro is the currency of one of South Africa's largest trading partners and the rand tends to track its movements.
Gold, a major South African export, climbed to record highs, supporting the rand.
The rand has tried to break through the R7.20 level several times in the past few sessions. The dealer said R7.20/18 were the next key levels for the currency.
- Reuters