JOHANNESBURG - The South African rand strengthened in early trade on Wednesday, as investors bought into riskier assets following dovish comments from Federal Reserve Chair Jerome Powell who left the door open to further U.S. interest rate cuts.

At 0745 GMT, the rand traded at 17.2775 against the dollar , about 0.6% stronger than Tuesday's close.

Like other risk-sensitive currencies, the rand often takes cues from global drivers such as U.S. policy and economic data.

Powell said the end of the Fed's long-running effort to shrink the size of its bond holdings may be coming into view.

"Extrapolating that back to ZAR implies that risk appetite will likely remain elevated. Should global central banks continue to ease, and AI investment continues to yield efficiencies that boost profitability, risk appetite will remain supportive of the ZAR," said ETM Analytics in a research note.

"With gold and platinum prices surging higher and SA's terms of trade as strong as ever, the probability is high that the ZAR will regain its footing later this week or next and attempt another assault on the 17.00/dlr level".

On the Johannesburg Stock Exchange, the Top-40 index was up 1.1%.

South Africa's benchmark 2035 government bond was also stronger, with the yield down 6.5 basis points to 9.07%.