The rand gained more than 1% against the dollar on Thursday, pulling back from a steep sell-off as worries about the global economy eased slightly.
The rand has been on a torrid run this month, losing around 6% against the US currency on a dismal domestic growth outlook and fears the United States could tip into recession over its trade war with China.
The rand traded at R15.25 versus the dollar by 1630 GMT, around 1.2% stronger than its previous close, after higher-than-expected US retail sales data.
Some international investors use the South African currency as a proxy for emerging market risk, making it highly susceptible to swings in sentiment on global markets.
Some traders said the recovery in the rand was likely to be short-lived, given grave concerns about the country’s debt trajectory and the sluggish pace of economic reform.
A senior International Monetary Fund representative said on Thursday that South Africa’s public debt was reaching “uncomfortable” levels.
On the Johannesburg bourse, stocks recovered some ground lost earlier in the day but still closed weaker, with investors averse to risk a day after an inversion of the US Treasury bond yield curve, a sign some investors see as a harbinger of recession in the world’s largest economy.
The Johannesburg Stock Exchange’s All-Share index lost 0.35% to 53,841 points and the benchmark Top 40 was down 0.33% to 48,117 points.
Bullion producer Gold Fields led the declines on the blue-chip index, slipping 9.76% to R80.98 after it reported a lower than expected increase in half-year profits.
Fellow miners Anglo American Platinum and Anglo American fell 3.79% to R812.12 and 3.49% to R313.18, respectively. South African paper and pulp maker Sappi lost 2.56% to R42.68.
The banking index rose 3.55% to 8,340 points. Insurer Discovery closed up 5.26% to R105.91, while Standard Bank increased 4.58% to R173.50 and Absa rose 4.03% to R152.07.
“Shares are trading at levels that we’ve last seen – in valuation levels – 10 years ago,” said FNB Wealth and Investments portfolio manager Wayne McCurrie. “They’re cheaper than what they were in the teeth of the financial crisis.”