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Currencies (28.6.04)

27 June 2004 Angelo Coppola

The rand held steady on Friday, pausing for breath after scaling a 12-week peak against the dollar.

RMB AM reports that while bonds gave up some gains, prompted by benign data and receding rate hike fears.

Traders said domestic markets were likely to remain on hold ahead of an expected US interest rate hike next week, with attention fixed on the outcome of the Federal Reserve's two-day monetary policy meeting, which starts tomorrow.

In late afternoon, the rand was quoted at R6,31 against the dollar - 2c weaker than its closing level on Thursday, after briefly hitting R6,21 to the dollar on Wednesday - its strongest level since April 12, according to Reuters data.

The rand has rallied by more than 3% in the past 12 days, buoyed by offshore demand, surging gold prices - which climbed back above the psychologically important $400 level - and the broadly weaker dollar.

The dollar gained on Friday, as a US economic growth report, while modestly disappointing, showed higher inflation, spurring hopes that the Federal Reserve would be more aggressive in raising interest rates.

Higher interest rates tend to boost the appeal of US-based assets for global investors.

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