The South African rand was marginally stronger in early trade on Thursday after the finance ministry said it was withdrawing a contentious increase in value-added tax (VAT) that was due to kick in on May 1.

At 0615 GMT, the rand traded at 18.66 against the dollar, up about 0.2% on Wednesday's closing level.

The VAT hike has caused political wrangling for weeks, exposing deep rifts in the ruling coalition government.

The second-biggest party in the coalition, the Democratic Alliance (DA), went to court to challenge the tax increase and voted against the fiscal framework in parliament because of it.

Financial market fears that the DA could exit the coalition were one factor behind the rand's slump to a record low this month, the other being risk aversion over US President Donald Trump's tariffs.

Later on Thursday investors will look to March producer inflation figures for clues about price pressures.

Data on Wednesday showed consumer inflation slowed more than expected last month.

The benchmark 2030 government bond was little changed in early deals.