The rand was relatively stronger on Thursday morning amid early signs that Italy could avoid new elections, widely seen as potentially damaging to the eurozone project.
Two anti-establishment parties have reportedly agreed to revive talks to resolve the political gridlock, which hurt the euro and broader global markets earlier in the week.
The eurozone as a bloc has been through testing times over the last few years, hobbled in part by a sovereign debt crisis, which unleashed painful austerity measures on some member countries in exchange for bailouts.
“It’s been quite a week in global financial markets so far and we have only just crossed the halfway stage,” Standard Bank trader Warrick Butler said in e-mailed note clients.
“We still have … US employment data tomorrow. Add into that the fact that today’s month-end should add another flow dynamic to the markets means a really interesting end to the week is in store for us. I hope.”
Riding the wave of the improved sentiment, the rand perked up to session highs of R12.45/$, from lows of R12.73/$ earlier in the week.
The risk-on environment was reflected in higher stock markets, while perceived safe-haven assets broadly retreated.
South African government bonds were also relatively well supported in early trade, though they still remained on track to end weaker for the month.
The yield on the benchmark R186 bond was at 8.49%, from 8.53% at its last settlement.
At 10.23am, the rand was at R12.4734 to the dollar from R12.5138, R14.6211 to the euro from R14.5988 and R16.6394 to the pound from R16.6272.
The euro was at $1.1721 from $1.1665.