(Adds latest prices, analyst comments)
JOHANNESBURG, July 28 (Reuters) - South Africa's rand retreated on Tuesday, pulling back from a strong rally as risk demand globally paused with investors eyeing the U.S. central bank's latest policy meeting.
At 1630 GMT, the rand ZAR=D3 was 0.53% weaker at 16.5600 per dollar, stepping back from a Monday best of 16.3925.
The U.S. Federal Reserve meets on Tuesday and Wednesday, and is expected to reiterate a dovish policy stance and the benefits of an average inflation target, which would allow rates to stay lower for longer, a boon for high-yielding assets. International Monetary Fund late on Monday approved $4.3 billion in emergency financing for South Africa to help address the "severe economic impact" and health challenges of the coronavirus pandemic. approval was expected and barely moved the currency, but traders see concerns about the government's mounting debt pile creeping back into investors' thinking, once global stimulus injections taper.
"Any downside moves will see the pair (dollar/rand) find support around 16.35, while 16.80 remains the resistance level to break to the topside. The rand may also find some fundamental support in the days ahead as the cash for the IMF loan flows into the country," market economists at ETM Analytics said in a note.
"The longer-term outlook also remains ZAR-bullish, at least until the MTBPS (medium term budget) in October."
Bonds also backtracked. The yield on the benchmark instrument due in 2030 ZAR2030= rose 3 basis points to 9.185%.
The Johannesburg Stock Exchange (JSE) inched up, with the FTSE/JSE All Share Index .JALSH 0.29% higher at 56,488 points and the Top 40 Companies Index .JTOPI up 0.25% at 52,043 points.
Kumba Iron Ore KIOJ.J reported a 17% drop in interim earnings, weighed down by lower sales volumes and the impact on output of a coronavirus-induced lockdown. the mining index .JMINI had dipped 0.52% on the day, with the gold miners's list slipping 1.1% .JGLDX . On the upside, the retailer's index climbed 1.5% .JREIT
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