South Africa's rand strengthened in early trading on Monday, with investors looking ahead to inflation figures and an interest rate decision due later in the week.

At 0701 GMT, the rand traded at 18.3050 against the dollar , about 0.2% stronger than its previous close.

The dollar index was last trading down 0.18% against a basket of major currencies, with analysts saying the greenback's weakness was likely due to optimism that U.S. interest rates may have peaked.

Local focus will be on inflation figures due on Wednesday and an interest rate decision by the South African Reserve Bank on Thursday as markets look for fresh guidance.

"Investors are closely watching for the upcoming... local CPI numbers for further market direction. We also have our local interest rate decision with no change expected," said Andre Cilliers, currency strategist at TreasuryONE.

Last Friday, S&P Global affirmed South Africa's foreign and local currency ratings, citing benefits from access to deep domestic markets, concessional funding and an actively traded currency.

On the stock market, the Top-40 index was up about 0.3% in early trade.

South Africa's benchmark 2030 government bond was marginally stronger in early deals, with the yield down 0.5 basis point to 10.070%. (Reporting by Bhargav Acharya Editing by Bernadette Baum)