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South African rand holds gains after rate hike

Kitco News

JOHANNESBURG, March 31 (Reuters) - South Africa's rand held steady against the dollar early on Friday, trading at its strongest level in more than a month after the central bank delivered a higher than forecast rate hike the previous day.

At 0647 GMT, the rand traded at 17.8200 against the dollar, not far from its previous close of 17.8125.

The South African Reserve Bank (SARB) raised its main lending rate by 50 basis points to 7.75% on Thursday, twice the 25 basis point increase that most economists had predicted.

The bank has now raised rates for the ninth time in a row, adding a total of 425 bps to the repo rate since it began tightening policy in November 2021.

The decision helped the rand breach the 18 rand per dollar barrier for the first time in more than six weeks.

"In relative terms, the ZAR still has a long way to go. However, with the SARB now hawkish, there may be enough to help the ZAR unwind more of its undervaluation," said ETM Analytics in a research note.

The government's benchmark 2030 bond was stronger in early deals, with the yield down 2.5 basis points to 9.875%.

Reporting by Nellie Peyton; Editing by Alexander Smith
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