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On Friday, the rand was trading at levels last seen in mid-November 2023, amid dollar weakness and stronger commodity prices.
By late afternoon, the SA currency was at R18.19, after dipping below R18.15 earlier in the day.
It gained almost 1.5% against the dollar over the past week, and is up more than 4% since mid-April. Less than a month ago, a dollar was worth almost R19.32.
The dollar suffered a weekly fall against most currencies, as market speculation continues to swirl about the timing of Federal Reserve rate cuts amid signs of cooling inflation and a softening US economy.
Data on Wednesday showed consumer prices rose more slowly than expected in April, but various policymakers have given little away on when rates may fall, limiting the dollar's declines this week.
The dollar index - which tracks the US currency against six peers - was up 0.2% on Friday at 104.73, but was still on track for around a half-percentage-point weekly decline.
Futures markets are currently pricing in 46 basis points of Federal Reserve rate cuts by the end of this year.
"The comments this week from Fed officials were, in our view, still indicative of a Fed that would be willing to turn and cut relatively quickly if the evidence becomes available to back it up," currency analysts at MUFG said in a note.
But while investors continue to price in interest rate cuts from the Fed later this year, Casparus Treurnicht, a portfolio manager at Gryphon Asset Management, says questions remained.
"We are not convinced - especially witnessing the move in inflation month-on-month this year. It is data dependent, and the Fed’s inflation target is still 2%." US inflation in April was at 3.4%.
In Europe, even though markets price rate cuts beginning in June, recent data has shown some upside surprises. Germany's economy grew more than expected last quarter and investor morale is at a two-year high.
Euro zone consumer inflation data on Friday came in at 2.4% year-on-year in April, in line with a Reuters poll. The euro dipped 0.2% on the day to $1.0844. It is still up around 0.7% on the dollar this week.
Eurozone policymakers have increased confidence that inflation will ease back to target next year due to easing price pressures, ECB vice president Luis de Guindos said on Friday.
Treurnicht says the rand also received support from metal price gains, especially copper, gold and platinum.
"This is obviously beneficial to commodity producing countries like South Africa."
Platinum prices in the futures market rose more than 13% over the past month.
