At 1520 GMT the rand was 0.2 percent firmer at 12.6800 per dollar, after earlier trading as much as 1.1 percent stronger versus the US currency.
The rand gained in line with other emerging markets, which saw a relief rally as the Fed kept rates unchanged and did not signal that it was set to quicken the pace of rate hikes.
"Because we didn't see a hawkish tilt from the Fed, the rand is recovering on the back of that," said Halen Bothma, an analyst at ETM Analytics.
The rand struck its lowest against the dollar in more than four months on Wednesday, after several weeks of losses that have erased all of the gains since Cyril Ramaphosa was elected leader of the ruling African National Congress in December.
Investor sentiment towards South Africa improved markedly after Ramaphosa was elected ANC leader and replaced scandal-plagued Jacob Zuma as head of state in February. But investors now want to see signs that Ramaphosa will make good on promises to reform the economy.
Bothma at ETM Analytics said he expected the rand to be relatively resilient in the coming weeks because of favourable trade dynamics, benign inflation and a pause in rate cuts by the South African central bank.
Bonds were little changed on Thursday, with the yield on the benchmark instrument due in 2026 down less than 1 basis point to 8.325 percent.
The tone on the local bourse was bearish, however, in line with a subdued mood for global equities.
The Top-40 index closed down 2.22 percent at 50,408 points and the All-Share index fell 2.01 percent to 57,273 points.
Market heavyweight Naspers contributed to the downward trend, closing down 4.45 percent at 2878.77 rand, after a fall in China's Tencent Holdings, in which Naspers is a major shareholder.
Dis-Chem Pharmacies lost 5.64 percent to 35.29 rand ahead of the publication of its results on Friday.
Most sectors ended lower, including banks and retailers.
One of the biggest gainers was South African telecom giant MTN Group, which rose 1.13 percent to 127.7 rand after it reported a 9.1 percent rise in its revenue for the quarter to the end of March.