At 1503 GMT, the rand was up over 1.6% against the dollar to 18.1925, its highest level in a month.
U.S. consumer prices rose to 3% in June, lower than market expectations of a 3.1% increase, signalling to investors that the U.S. Federal Reserve may be nearing the end of its tightening cycle.
Although the Fed has said rates could be hiked in its next meeting, investors are betting on just one single hike before it pauses, a move which could gradually spark economic activity.
"We are seeing strength come in on the emerging market currencies including commodity based currencies of which the rand is both," said Shaun Murison, senior market analyst at IG.
The dollar last traded around 0.75% weaker against a basket of global currencies.
The main board of the Johannesburg Stock Exchange was up 1.99% to 76,367 points, while the benchmark top 40 rose above 2.1% to 70,991.
The resources index rose by 3.1%, driven by platinum group metal's miners, Northam Platinum and Anglo American platinum.
Greg Davies, head of wealth at asset manager Cratos Capital, added that the weakness in the dollar boosted metals prices while the prospect of slower rate hikes had a positive impact overall on the local bourse.
South Africa's benchmark 2030 government bond firmed further, with the yield down 2.1 basis points to 10.515%.
(Reporting by Tannur Anders and Kopano Gumbi,Editing by Alexander Winning, Promit Mukherjee and Ed Osmond)
