At 1504 GMT, the rand traded at 18.4300 against the dollar, about 0.5% stronger than its previous close. The rand had gained as much as 1% earlier in the day.
The dollar was last down about 0.38% against a basket of global currencies.
On Wednesday, the Fed announced its decision to keep interest rates unchanged, weakening the dollar as investors perceived that the U.S. central bank may be done raising rates.
The risk-sensitive rand often takes cues from global factors like U.S. monetary policy in addition to local drivers.
The rand rallied on Thursday as investors bought into riskier assets, said Casparus Treurnicht, portfolio manager at Gryphon Asset Management.
"Since the Fed did not increase rates last night some investors were relieved, causing stocks and bonds to rally. The rand benefits from this as the dollar's safe haven status is not needed for the time being," Treurnicht said.
On the Johannesburg Stock Exchange, the blue-chip Top-40 index closed up 2.43%, while the broader all-share index was 2.36% higher.
South Africa's benchmark 2030 government bond was stronger, with the yield down 2 basis points at 10.365%.
(Reporting by Tannur Anders with additional reporting by Bhargav Acharya; Editing by Subhranshu Sahu, Kirsten Donovan)
