South African rand firms as eyes on Trump policies

Updates prices as of 1500 GMT, adds analyst comment to paragraphs 4 and 6

JOHANNESBURG, March 3 (Reuters) - South Africa's rand firmed on Monday against a weaker dollar ahead of a plan by the U.S. to impose tariffs on Mexico, Canada and China and as markets processed U.S. President Donald Trump's clash with Ukrainian President Volodymyr Zelenskiy.

At 1504 GMT, the rand traded at 18.6150 against the U.S. dollar ZAR=D3, about 0.5% stronger than its previous close.

The dollar =USD last traded about 0.7% weaker against a basket of currencies.

"The rand regained some ground after Friday's market response to pending tariffs and the escalating exchanges between President Trump and President Zelenskiy in the Oval Office," said Zain Vawda, market analyst at MarketPulse by OANDA.

European leaders agreed at the weekend to draft a Ukraine peace plan to take to the United States, following Zelenskiy's clash with Trump.

"Geopolitical tensions and tariff policies under the Trump administration will dominate the agenda in the months ahead, leaving the rand largely reactive to external developments," Vawda said.

Trump said last week that his proposed tariffs on Mexico and Canada will go into effect March 4 as scheduled because drugs are still pouring into the United States from those countries. China will be charged an additional 10% on the same day.

The risk-sensitive rand tends to take direction from global drivers in addition to local factors.

A local purchasing managers' index (PMI) survey on Monday showed South African manufacturers reported a continued deterioration in business conditions in February.

Domestic-focused investors will on Tuesday look to fourth quarter gross domestic product figures for clues on the health South Africa's economy.

On the Johannesburg Stock Exchange, the blue-chip Top-40 .JTOPI index closed up about 2%.

South Africa's benchmark 2030 government bond ZAR2030= was also stronger, with the yield down 4.5 basis points to 9.1%.