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JOHANNESBURG - The rand rose more than 1percent on Friday as short sellers bought back into the currency at cheaper levels after hawkish comments from the central bank caused a sharp decline in the previous session.

Having risen more than 1percent earlier in the session on Friday, at 5pm the rand bid at R13.4405 to the dollar, 6.22cents firmer that at the same time on Thursday, the day on which the local unit had tumbled to a two-week low of R13.6195 overnight after the Reserve Bank held benchmark interest rates and cut its outlook for the local economy.

“The rand appreciated a bit on short covering at the start of Friday’s session in the aftermath of US President Donald Trump saying late on Thursday that he was “not thrilled” by Fed rate hikes,” said analyst at Continuum Economics, Juri Kren.

While the decision was expected, the bank’s view that inflation pressures had tilted to the upside and that economic growth would remain tepid soured sentiment, stoking a quick selloff as bearish investors used R13.50 as an exit point.

Friday’s trade session however saw the rand open on the front foot.

And with Trump’s latest comments spurring investors to take profits on the greenback’s recent rally, and subsequent short-covering by rand bears seeing value around R13.45, the rand extended its run firmer.

The rand is, however, expected to struggle to hold on to gains in the upcoming week with US-China trade tensions seen returning to the forefront of investors radars.

Bonds were also firmer, with the benchmark paper due in 2026 down 1 basis point to 8.735percent.

On the bourse, stocks closed higher for a fourth consecutive session, led by rand-hedged stocks which tend to strengthen as the currency weakens.

The blue chip JSE Top40 index closed up 1.4percent at 50904.2 points, while the broader all share index advanced 1.27percent to 56990.2 points.

Bourse heavyweight Naspers, which owns about 30percent of the Chinese technology firm Tencent, closed up 1.79percent at R3448.50, while British American Tobacco was up 3.72percent to R697.50.

Sasol gained 0.77percent to R502.84 after it flagged higher full-year EBITDA.

-REUTERS