The rand was a lot stronger on Friday morning, extending the rally that followed the surprise decision by the Reserve Bank’s monetary policy committee (MPC) to keep interest rates on hold. Higher local interest rates tend to attract foreign capital via bond inflows. In justifying the decision, Bank governor Lesetja Kganyago pointed to a number of factors that he said posed potential risks to the inflation outlook. These included the possibility of higher rates later in the year in the US and UK, which could divert flows from emerging markets, thus weakening the rand, a key driver of inflation.
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