Johannesburg - The rand held firm near two-month highs against
the dollar on Thursday, boosted by strong commodity prices and a return of risk
appetite globally, with light trading expected ahead of a central bank rate
decision at 13:00 GMT.
Market players anticipate the Reserve Bank will keep rates
on hold, with the trend extending to most of 2012 as the bank struggles to
balance high inflation with a weak economy.
The rand was at R7.96 to the dollar at 06:30 GMT, unchanged
from where it closed in New York on Wednesday and not far off a two-month high
of R7.94 touched in that session.
The local unit is expected to trade in the R7.95 - R8.00
range ahead of the decision.
“Dollar-rand posted a decisive break below R8.00 in late
trade yesterday to set the tone for the weeks ahead. That said, we could see
some sideways action around R7.95 this morning as we await the announcement on
local interest rates by the MPC (monetary policy committee),” said Judy Padayachee.
After the rates decision is announced, the rand is expected
to continue to firm and trade between R7.80 and R7.70 going into next week.
Government bonds gained after weak domestic data in the
previous session added to the case for the central bank not hiking interest
rates.
Yields on government bonds were at one-month lows and down 4
basis points to 6.64% on the 2015 issue and 8.40% on the 2026 bond.
Bonds will likely not react if the decision is to keep rates
on hold, with traders taking clues from the tone of governor Gill Marcus’
speech. Dovish remarks could trigger a rally in bonds.