The rand strengthened early on Wednesday, clinging on to its previous gains, as global appetite for risk and high yields rose on optimism around vaccine rollouts.
By 0700 GMT, the rand firmed 0.2% to R14.93 per dollar from an overnight close at R14.96.
South Africa has seen slightly more inflows than other emerging markets back into local assets by foreign investors, largely a function of the high yield on offer with the central bank set to keep lending rates steady in 2021.
Offshore investors bought R2.68 billion of bonds last week, marking three straight weeks of inflows, data from the Johannesburg Stock Exchange showed on Tuesday.
Sentiment has also been aided by South Africa kicking off its vaccine Covid-19 rollout this week while easing lockdown restrictions.
“If yesterday’s (Tuesday) nominal auction was anything to go by, it is clear that SA government bonds still have enough gas left in the tank and continue to enjoy much favour and support from offshore investors,” said analyst at RMB Tebogo Mekgwe in a note.
“The local currency is finding itself in familiar territory, straddling below the R15.00 handle.”
Bonds also traded firmer in early deals, with the yield on the benchmark 2030 government issue down 1 basis point to 8.535%.