Rand in modest gain against the dollar

THE RAND rallied against the dollar and yields on government bonds dipped to their lowest in a year as the Reserve Bank kept interest rates unchanged at its final policy meeting for this year.

Lesetja Kganyago, presiding over his first monetary policy committee meeting since being appointed governor last month, cited continued economic weakness and the lower trajectory of headline inflation as reasons for holding the main lending rate at 5.75 percent.

The decision pushed the rand to its firmest in nearly three weeks. At 5pm, the rand was bid at R10.9603 to the dollar, rallying 10.65c from Wednesday’s bid at the same time.

Local bonds were also buoyed. The yield on the benchmark paper due in 2026 rose to a level last seen on October 24 last year.

Underlying inflation pressures in the US rose in October, even as falling oil prices kept overall consumer prices in check, bolstering expectations of a mid-2015 interest rate hike from the Federal Reserve.

Other data yesterday showed vigour in the economy, with home resales rising at their fastest pace in a year last month and factory activity expanding this month to its highest level since December 1993.