The South African rand gained in early trade on Monday as investors turned their attention towards the 2026 national budget, to be tabled later this week, amid what analysts described as a "relatively favourable macroeconomic backdrop."

At 0630 GMT, the rand traded at 15.9925 against the dollar, up 0.4% from its previous close.

Local investors are awaiting Finance Minister Enoch Godongwana's budget speech on Wednesday for insights into the ruling coalition's fiscal priorities, strategies to address national debt, and planned economic reforms.

"This year's Budget Statement will show further progress in fiscal consolidation, with a faster pace of deficit reduction, a widening primary surplus and stabilising public debt," said Nedbank economists in a note.

"The improved macroeconomic environment has led to a broad-based increase in tax collections, and the tax windfall will help narrow the overall budget shortfall to below 3% of GDP by 2029, provided expenditure restraint is maintained," added the note.

In a November budget review, South Africa's Treasury projected a consolidated budget deficit of 3.8% for the current fiscal year and 3.3% by 2027.

Analysts said that the US Supreme Court's decision to overturn former President Donald Trump's sweeping tariffs provided additional support for the rand, helping it recover some losses from recent sessions.

South Africa's benchmark 2035 government bond strengthened in early trade, with the yield falling 2.5 basis points to 7.97%.