At 5pm, the rand bid at R13.7252 to the dollar compared to a close of R13.76 overnight in New York.
The rand marched to a one-month best on Monday on relief that ratings agency Moody’s would wait until after the ANC leadership conference, and possibly February’s budget, before downgrading the country’s debt.
S&P Global Ratings downgraded the country’s local currency debt to sub-investment grade on Friday and thrust the foreign currency debt deeper into “junk” territory, while Moody’s opted to put the rating on review for a downgrade.
A downgrade by Moody’s could have forced index-tracking and rating-constrained funds to sell more than $10billion (about R138.7bn) in debt, analysts have predicted.
Traders said the rand had also benefited from increasing signs that Cyril Ramaphosa was leading Nkosazana Dlamini-Zuma in the race to replace President Jacob Zuma as leader of the ANC.
“The market is starting to price a Ramaphosa victory. This we think is the real reason (for the rand strength),” said John Cairns, chief currency strategist at Rand Merchant Bank.
A survey last Thursday showed business confidence slipped deeper into negative territory in the fourth quarter, highlighting pressure still faced by the economy after it emerged from a first quarter recession.
The statistics office is due to release third quarter gross domestic product figures next Tuesday.
Yields on the benchmark paper due in 2026 were down 6 basis points to 9.18percent.
Stocks ended slightly weaker with mining shares out of favour as industrial metal prices faltered.
The benchmark JSE Top40 index was down 0.31percent to 53645.44 points and the broader all share index was down 0.12percent at 60082.79 points.
Mining heavyweights took the most points off the index with Anglo American dropping 3.5percent to R254.44 and BHP Billiton slipping 3.21percent to R249.32.
Glencore retreated 3.27percent to R63.55, while Harmony Gold lost 0.54percent to R24.