The South African rand rallied on Monday as investors welcomed President Cyril Ramaphosa's annou8ncement of a new coalition cabinet that includes the leader of the former opposition Democratic Alliance (DA).

At 0934 GMT the rand traded at 18.01 against the dollar , 1% stronger than its previous close.

After weeks of intense deliberations, Ramaphosa named DA leader John Steenhuisen as agriculture minister in his cabinet line-up on Sunday, bringing the party and other coalition members into his new government team.

The 32-member cabinet includes ministers from seven different parties. Analysts and economists saw the inclusion of the pro-business DA in some key portfolios as a positive.

"There will be a palpable sense of relief that Mr Ramaphosa has finally named his executive following protracted ... negotiations with his new coalition partners," said Jee-A van der Linde, senior economist at Oxford Economics.

Van der Linde said it remained to be seen whether the unity government formed by Ramaphosa would be able to address South Africa's economic issues, but the new cabinet was a business-friendly outcome.

"The rand exchange rate is likely to strengthen further in the immediate term," he added.

Ramaphosa's African National Congress lost its majority for the first time in three decades in the May 29 election and has formed a unity government with former rivals as a way to stay in power.

Momentum Investments economist Sanisha Packirisamy said the reappointment of Enoch Godongwana as finance minister signalled continuity.

"The inclusion of a DA deputy (finance) minister adds to the checks and balances of that portfolio and allows the DA to make a more meaningful contribution to policymaking," she said.

On the domestic economic front, a purchasing managers' index survey showed factory activity contracted again in June. Vehicle sales figures for June are due later on Monday.

On the Johannesburg Stock Exchange, the Top-40 index was up 0.6% while the all-share index gained 0.9%. The country's benchmark 2030 government bond strengthened, with the yield down 12 basis points at 9.865%.

(Reporting by Bhargav Acharya and Kopano Gumbi Editing by Alexander Winning and David Goodman )