The rand firmed slightly on Tuesday as risk appetite improved after US President Donald Trump left hospital following treatment for Covid-19.
Renewed hopes of US stimulus also supported riskier currencies.
At 1550 GMT, the rand traded 0.2% firmer at R16.55 per dollar from its previous close of R16.57.
After steep losses during the onset of the Covid-19 pandemic, the rand has regained levels last seen in March, mainly thanks to improved appetite for risk.
Analysts have however warned of possible sharp reversals in emerging market currencies should developed economies – the United States, Europe and Asia – pull back monetary and fiscal stimulus measures, or suffer a sustained resurgence in Covid-19 infections.
“US dollar weakness, albeit slight, has reinforced EM currency gains. The rand is an obvious exception as it bumbles along in the 16.50s, reflecting some degree of consolidation after days of sustained strength,” said Nema Ramkhelawan-Bhana, an analyst at Rand Merchant Bank.
Talks between lawmakers in Washington over a new stimulus package to support the world’s no.1 economy have stalled, further complicated by the spread of the coronavirus among key policymakers including US President Donald Trump.
In fixed income, the yield on the benchmark government bond due in 2030 rose 5.5 basis point to 9.55%.
Shares on the Johannesburg Stock Exchange (JSE) retreated after three days of gains.
The benchmark FTSE/JSE all-share index was down 0.59% to 54,203 points, while the bluechip top 40 companies index was down 0.63% to 49,869 points, slipping below the key psychological level of 50,000.
The losses were broad-based, with the financials and mining indices weakening over a percent of gains.