At 1531 GMT, the rand traded at 18.1850 against the dollar, about 0.8% firmer than its previous close.
The dollar was down about 0.7% against a basket of global currencies as investors speculated the Fed would no longer raise rates by 50 basis points this month after the sudden collapse of Silicon Valley Bank.
Investors will scrutinise Tuesday's U.S. inflation data to predict how hawkish the central bank may be.
Jitters surrounding the collapse of Silicon Valley Bank, under U.S.-listed SVB Financial Group, prompted concerns over whether other banks could be facing similar problems.
On the Johannesburg Stock Exchange, shares in the banking sector were down around 4%.
"Our bank shares have been clobbered, absolutely clobbered," said Sasfin equity strategist David Shapiro, adding the move was in line with the selloff in banking shares globally.
Stocks on the JSE were down overall, with the blue-chip Top-40 index down 1.36% while the broader all-share index closed 1.25% lower.
South African lender Absa Group reported a 13% rise in full-year profit on Monday, driven by a rebound in economic activity as the effects of the COVID-19 pandemic waned.
Mobile operator MTN Group reported a 16.9% rise in full-year earnings, but revised the medium-term profit margin target range for its South African business down due to power outages.
The government's benchmark 2030 bond was stronger, with the yield down 13 basis points to 10.025%.
(Reporting by Alexander Winning and Tannur Anders; Editing by Nellie Peyton and Kirsten Donovan)
