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South Africa's rand strengthened in early trade on Monday following President Cyril Ramaphosa's announcement of his new coalition cabinet. At 0737 GMT, the rand was trading at 18.0150 against the dollar, marking a 1% increase from its previous close. This boost came after Ramaphosa named John Steenhuisen, leader of the former opposition Democratic Alliance (DA), as the new agriculture minister.

After weeks of intense deliberations, Ramaphosa's decision to include Steenhuisen and other coalition members in his cabinet was seen as a significant move. "There will be a palpable sense of relief that Mr. Ramaphosa has finally named his executive following protracted and often terse negotiations with his new coalition partners," noted Oxford Economics in a research note.

The African National Congress (ANC), Ramaphosa's party, lost its majority for the first time in three decades in the May 29 election, prompting the formation of a unity government with former rivals to maintain power. The new 32-member cabinet comprises ministers from seven different parties, reflecting a broad coalition.

Domestic investors are now focusing on the upcoming release of a monthly purchasing managers' index (PMI) survey for the local manufacturing sector by Absa and vehicle sales figures, both expected later on Monday. The stock market responded positively, with the Top-40 index rising by 0.5% and the broader all-share index trading 0.8% higher in early trade. Additionally, South Africa's benchmark 2030 government bond strengthened, with the yield dropping 14.5 basis points to 9.840%.

This cabinet reshuffle and the subsequent market reactions highlight the significant impact of political stability on economic confidence. Investors and analysts will be closely watching the performance of the new government and its ability to implement policies effectively within this coalition framework.