JOHANNESBURG, Sept 26 (Reuters) - South Africa's rand

edged higher on Thursday, with stronger risk appetite among

investors after rate cuts by the U.S. Federal Reserve last week

and positive sentiment in the months following May's national

election.

At 1350 GMT, the rand traded at 17.31 against the dollar

, about 0.2% stronger than its previous close.

The local currency has hit repeated 20-month highs this week

following recent rate cuts in the U.S. and by South Africa's

central bank.

Markets have also remained upbeat about the future prospects

of the coalition government, which has crossed 100 days in

power.

"Monetary easing in the developed world is supporting risk

appetite and driving capital to higher-yielding jurisdictions,

with the post-election improvement in (South Africa's) risk

profile making it a prime candidate for foreign capital flows,"

said Danny Greeff, co-head of Africa at ETM Analytics.

"All in all, things are still looking up for the rand,

notwithstanding an expected loss of bullish momentum in the

coming days," Greeff added.

Data on Thursday showed South Africa recorded foreign direct

investment inflows of 16.6 billion rand in the second quarter of

2024, down from 24.4 billion rand in the first quarter.

Also on Thursday, statistics agency data showed South

Africa's producer inflation fell to 2.8% year-on-year in August

from 4.2% in July.

On the Johannesburg Stock Exchange, the blue-chip Top-40

index last traded up about 2%.

South Africa's benchmark 2030 government bond was

slightly stronger, with the yield down 1.5 basis points to

8.83%.

(Reporting by Bhargav Acharya and Tannur Anders;

Editing by Ros Russell)