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The rand firmed by 1% against the dollar on Monday at lunchtime, as a number of emerging market currencies strengthened against the greenback.
The local currency opened at R14.58/$ and was trading at R14.45/$ at 13:16.
"We have seen the US dollar on the back foot this morning, with most emerging market currencies benefiting," said TreasuryONE. "We have seen the other majors also perform better vs the dollar with the euro back above 1.14 from 1.1365 early this morning."
By 13:00, the Turkish lira, for example, had gained 1.27% against the dollar, while the Brazilian real gained 1.7%.
On Friday the rand had weakened against the dollar after global ratings agency Moody's said the mini budget presented by Finance Minister Tito Mboweni earlier in the week was credit negative. Moody's is the only major global ratings agency to still have SA's sovereign debt at above investment grade.
If Moody's does downgrade SA, the rand is expected to fall sharply, as SA sovereign bonds would automatically be expelled from the Citi World Government Bond Index. Moody's has not yet said when it will take its ratings action on SA government debt.
Jameel Ahmad, the global head of currency strategy & market research at FXTM said in a note to subscribers on Monday morning that the rand would likely take its cue from the performance of global stock markets.
"We still see a great deal of negative market sentiment from investors towards global equity markets, which provides a significant downside risk to emerging market assets as a result of investor reluctance to not take on risk in their portfolio."
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