South Africa's rand traded near a 1-1/2 week high against the dollar on Monday, riding mainly on a uptick in global sentiment ahead of a domestic central bank policy meeting expected to yield an interest rate hike.

At 0706 GMT the rand was trading at 16.44 versus the greenback, up slightly from Friday's close at 16.4500.

It took its cue mainly from global markets, where Asian stocks were lifted by higher oil prices, relieving some of the recent bearish pressure.

"Emerging markets ... have managed to claw back some of their 2016 losses resulting in the rand hitting our first support level of 16.4000, en route to 16.2000,"Standard Bank trader Warrick Butler said.

"A break and close of 16.20 and the rand could be on its way to the long ago imagined levels of 15.85 to 16.00. A lot of this will of course depend on how equity and commodity markets play out over the next week or so."

On the local front, investors await Thursday's monetary policy statement, with the majority of economists polled by Reuters expecting the South African Reserve Bank to raise interest rates by 50 basis points.

In fixed income on Monday, government bonds retreated from Friday's closing levels, with the yield on paper due in 2026 ticking up 2 basis points to 9.6 percent.