At 1515 GMT, the rand traded at 18.9850 against the U.S. dollar, about 0.3% stronger than its previous close.

The dollar index was last up about 0.23% at 104.220.

South African markets shrugged off President Cyril Ramaphosa's State of the Nation Address last week, in which he gave little detail about his plans to address major challenges such as power cuts.

Investors will turn next towards the yearly budget presentation on Feb. 21, which will lay out the government's spending priorities, revenue collection measures and updated economic forecasts.

Several negative factors including the president's lacklustre address, a weak growth outlook and political uncertainty are keeping the rand undervalued, said analysts.

"The uncertainty ahead of South Africa's election is putting a damper on the domestic currency, with the date not yet set," said Annabel Bishop, chief economist at Investec.

"Also negative for the rand, the political heat has increased substantially this year...with polls showing widely differing results for parties as the months wear on," she said.

General elections are expected to be held between May and August.

Statistics South Africa will release gold and mining production and retail sales figures later this week, which could give some clues about the state of the economy.

On the stock market, the Top-40 index closed 0.52% higher while the broader all-share was up 0.41%.

South Africa's benchmark 2030 government bond was weaker, with the yield up 9 basis points to 10.045%.

(Reporting by Nellie Peyton; Editing by Alex Richardson, Kirsten Donovan)