ZAR currency is used when referring to South African Rand. This South African legal tender is among the most valuable currencies in Africa. The Rand was introduced to replace the British Pound after the country got her independence.
100 South African cent make up a Rand. “Rand” was coined from the source of the country’s earliest gold; White waters Ridge (Witwatersrand). The Witwatersrand supplied a large quantity of gold to South Africa in the early times, hence the Rand being named after it.
ZAR currency like every other thing with South Africa, has a long history. The currency was introduced in 1961. At its earliest times, ZAR stood at 2 ZAR to 1 Pound. At the same time however, it was more valuable than the US Dollar.
With increasing political instability and pressure, the Rand bowed easily to US Dollar and never got to catch up with the Pound in the early 1980s.
Although the Rand is the official currency of South Africa, it is as well a legal tender in some countries. Other countries that accept Rand are the southern African countries of Namibia and Lesotho. Swaziland also accepts the South African Rand.
The currency exists in both coins and notes. It has gone through much physical changes to prevent counterfeiting and for other reasons. The changes Rand has gone through are in five stages. After its introduction in 1961, the currency first experienced change in 1970. The next changes came in 1992 and 2005.
In 2012, the appearance of the country’s currency was changed again to carry the face of Nelson Mandela.
As changes in currency kept occurring with the Rand, there were changes as well with the denominations. The earliest denominations of Rand were 2, 5 and 10 Rand. In 1984, 20 and 50 Rand were introduced. Today, 100 and 200 Rand have been added to the existing notes.
Rand In World Trading
The South African currency stands today very far from where it began in 1961. The currency began slightly below the pound and above the US Dollar. Today, both have left it in the dust.
As at 2013 Zar currency stood among the most traded currencies in the world. In a study carried out by Bank of International Settlement (BIS), it was seen that the Rand was the 18th most traded currency in the world. The research shows South Africa accounting for slightly over a percent of the world’s trade.
The state of the Rand in world trading fell from what it achieved between 1998 and 2007. Between this period, Rand accounted as the 10th most traded currency in 1998 and 15th in 2007. With the 2013 rating however, it performed better than it did in 2010, with a 20th ranking.
It is however, interesting to note that more Rand trading in the international market is outside the country than within. This indicated that around 55% of the daily Rand transaction is outside the country. More so, pairing currencies, the research indicated that in a combination of US dollar and Rand transaction, Dollar dominates the Rand transaction.
As recorded, in 2015, Rand experienced a steady growth against the Dollar, however by early 2016, it had dropped against the dollar by 37 percent.
Where Rand Stands
Among other Top world currencies, Rand is not performing at its best. Against the Pound, the Rand is at 18.91R to 1 Pound. Against the US Dollar, the exchange of rand is 14.44 Rand to a Dollar, and against the Euro the exchange is 16.09 Rand to 1 Euro.
These present reflections for 31st August 2016 as well shows Rand doing better than Nigeria’s Naira and Ghana’s Cedi. Rand runs over Nigeria’s Naira which lags at 21.85 Naira to 1 Rand. Ghana’s Cedi however is giving Rand Run for its money as it stands. Cedi stands above the Rand with 1 Cedi to 3.67 Rand.
There is high possibility that the rand may weaken further in recent weeks. This is as a result of the politics going on in the country and the case of possible ousting and arrest of Pravin Gordhan, the country’s Finance Minister.
Further bad news for the South African Rand is that analysts are noting there could be as high as 30% drop of the currency against the US Dollar. This is not unconnected to the struggle for the control of the country’s finances. This could affect the country’s credit strength and worthiness in the international market.
With the so much uncertainties and political drama in South Africa, the Rand may further slip down. This is basically because the country may not be able to maintain the trust of investors it is enjoying at the moment.