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JOHANNESBURG - The Rand reversed mild losses against the dollar yesterday after the central bank kept its benchmark repo rate at 6.75percent, defying expectations of a 25-basis point cut.

In fixed income, the yield on the benchmark government bond due in 2026 ended the session higher after the central bank took a slightly more hawkish tone on inflation than it has in the recent past.

At 5pm, the rand was bid at R13.2901 to the dollar, 2.61c softer than at the same time on Wednesday. However, by 5.30pm, the rand was almost 0.4percent firmer than its Wednesday close at R13.275 to the greenback.

Analysts say the gains could be short-lived.

“We expect to continue seeing pressure on the rand as well as other emerging market currencies as the US Federal Reserve Bank put potential rate hikes back on the table this morning, which could reduce the carry trade,” said Bianca Botes of Peregrine Treasury Solutions.

Stocks were flat, with the benchmark JSE Top40 index falling 0.05percent to 49548.85 points, while the wider all share index was barely changed at 55867.34 points.

Meanwhile, US stocks slipped from their all-time highs yesterday, weighed down by Apple and the hawkish stance of the Federal Reserve, which hinted at raising interest rates for a third time this year despite low inflation.

Apple fell 1.7percent and was on track to post its biggest two-day decline since June. The stock was the biggest drag on the three major indexes.

Fed chair Janet Yellen said the fall in inflation this year remained a mystery, adding that the central bank was ready to change the interest rate outlook if needed.

- REUTERS