Rand stable, pressure from rate expectations

Johannesburg - The rand was mostly flat against the dollar on Tuesday, clawing back most of its earlier losses, although it is likely to stay under pressure in a market now seeing some chance of an interest rate cut this month.

At 15:37 GMT the local unit traded at 11.6415 to the dollar, almost bang in line with Monday's close at 11.6375.

The rand is likely to lose ground, with weak domestic growth, coupled with receding inflation pressures due to a sharp drop in oil prices, leaving the door open for the SA Reserve Bank to loosen monetary policy this year.

The bank will hold its first 2015 policy meeting ending on January 29.

"The rand faces headwinds this year with the United States likely to start lifting interest rates while domestically economic growth will be constrained by electricity supply limitations," Investec analyst Annabel Bishop said.

In fixed income on Tuesday, the yield for the benchmark 2026 instrument was down 4.5 basis points at 7.38%, close to last Friday's 22-month lows, mainly due to market players cutting their 2015 interest rate forecasts.