Johannesburg - The rand edged towards its highest in a week against the dollar on Thursday as global risk sentiment remained supportive and investors priced in tighter monetary policy later in the year.

The Reserve Bank is announcing a decision on interest rates from 15:00 SA time and economists polled by Reuters expect the Monetary Policy Committee will stay put on rates after a hike in January.

The rand has recovered from five-year lows hit at the start of the year and has managed to trade stronger than the psychologically key 11 level this month, a recovery that should allow the central bank to pause on rate increases until later in the year as inflation pressures remain.

However short-term interest rates are pricing in the chance of a hike this afternoon.

At 08:30 SA time, the rand was up 0.2 percent at 10.6875 to the dollar, off a 10.7070 close in New York on Wednesday.

If the bank surprises the market by hiking its benchmark rate, the rand is likely to gain past the 10.66 level, the March 14 high.

Yields on government bonds were down 2.5 basis points at 8.395 percent on the benchmark 2026 bond and dropped 2 basis points at 6.835 percent. - Reuters