South Africa's rand continued to appreciate against the dollar on Friday, reaching a new 20-month high due to enhanced risk appetite and positive domestic sentiment. As of 1400 GMT, the rand was trading at 17.125 per dollar, reflecting a 0.35% increase from its previous close. Earlier in the day, it peaked at 17.075, marking its strongest position since early February 2023. 

The dollar index experienced a decline of 0.31% against a range of currencies, following a U.S. inflation report that suggested easing price pressures. The rand's upward momentum has been bolstered since a significant interest rate hike by the Federal Reserve last week, achieving multiple 20-month highs. 

Shaun Murison, a senior market analyst at IG, noted that the rand's strength is attributed to a favorable risk-on trading environment and a generally weaker U.S. dollar. Analysts also point to the improved risk profile of South Africa, following the establishment of a coalition government after the May elections, as a factor contributing to the currency's robustness. 

In the stock market, the Top-40 index rose by approximately 0.5%. Additionally, South Africa's benchmark 2030 government bond showed strength, with yields decreasing by 2.5 basis points to 8.805%.