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S.Africa's rand weaker vs dlr ahead of cbank meeting

Published 11/16/2009, 01:53 AM
Updated 11/16/2009, 01:57 AM

* Rand weaker after ANC policy talk

* Investors to watch policy uncertainty closely

* Govt bonds weaker, stock futures up

JOHANNESBURG, Nov 16 (Reuters) - South Africa's rand weakened slightly against the dollar on Monday ahead of a central bank monetary policy meeting and after the ruling ANC and its alliance said it would look at reviewing the central bank's mandate.

Over the weekend, the ruling ANC met with its trade union and communist allies who are pressurising the government to shift policy to the left.

After the meeting the alliance said it agreed to look at broadening the mandate of the central bank and set up a task team to study the impact of the strong rand currency. [ID:nLF256790].

The rand has strengthened more than 20 percent against the dollar so far this year, gains that are feared could weigh on sectors such as manufacturing.

However, Absa Capital's macro strategist Ian Marsberg said the weekend's political developments did not indicate new thinking in the ruling ANC.

"At this stage I don't think there's going to be much market impact... It might cause initial worry but there's nothing there that has not been said before."

The rand was trading at 7.42 against the dollar at 0640 GMT, after closing on Friday in New York at 7.40.

"It's still very much in ranges and we see 7.38 - 7.45 range for starters and there's also MPC tomorrow," said Jim Bryson, chief dealer at Rand Merchant Bank, adding the rand will likely track the euro.

The central bank's monetary policy committee (MPC) starts its two-day meeting on Monday, the first to be chaired by new Governor Gill Marcus, who is seen to be close to the unions.

A Reuters poll of 28 analysts showed the central bank is largely expected to leave the repo rate unchanged with four analysts predicting an interest rate cut on the back of weak demand indicators.

South African government bonds weakened, with the yield on the 2015 bond up 3.5 basis points to 8.46 percent and the 2036 issue climbing 6 basis points to 8.745 percent.

South Africa's bourse looked set to open in positive territory, with the blue- chip Top-40 December futures contract up 0.92 percent ahead of the 0700 GMT start of trade. The bourse closed higher for a 6th straight day on Friday. (Reporting by Phumza Macanda; Editing by Neil Fullick)

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