At 1001 GMT, the rand traded at 19.2500 against the dollar, about 1.08% stronger than its Friday closing level.
The dollar last traded at 103.09 against a basket of global currencies, about 0.05% stronger.
Analysts polled by Reuters predict a 25-basis-point (bp) rate hike by the South African Reserve Bank (SARB) on Thursday, in what could be its final hike of 2023.
"This will be one of the most important decisions in years. Our house view is for a 25 bp hike," Rand Merchant Bank (RMB) analysts said in a research note.
"Market pricing shows that they will do at least 50 bp, and maybe even 75 bp. The more they hike the better for the rand."
Other factors contributing to positive momentum for the rand "include the pullback in the USD (and) the fact that S&P didn't downgrade South Africa on Friday," ETM Analytics' Kieran Siney said in emailed comments.
On Friday, ratings agency S&P Global held off from changing South Africa's sovereign credit rating or outlook, in a reprieve for South African markets after a turbulent two weeks during which local assets were shaken by a U.S. allegation that a Russian ship had picked up weapons in South Africa in December.
The rand hit an all-time low against the dollar on Friday, trading at 19.5225 against the greenback.
South Africa is facing a crippling power crisis, where households and businesses are left in the dark for up to 10 hours daily. Struggling state utility Eskom warns that could intensify during the winter months, further damaging Africa's most industrialised economy.
Shares on the Johannesburg Stock Exchange were down, with both the blue-chip Top-40 index and the broader all-share index last trading just under 0.2% weaker.
South Africa's benchmark 2030 government bond was slightly weaker, with the yield up 0.5 basis points to 11.185%.
(Reporting by Tannur Anders and Rachel SavageEditing by Alexander Winning and Andrew Cawthorne)
