The South African Rand is easily one of the strongest currencies on the African continent.
You may consider that good news but only as long as you don’t look at the actual value of Rand against the Dollar.
The South African Rand (ZAR) is currently 13.91 Rand to 1 American Dollar.
The Rand to Euro value currently stands at 15.55 Rand to 1 Euro.
The current Rand to British Pound value is 17.57 Rand to 1 pound.
When you consider that a country like Nigeria is one the strongest economies in Africa, for comparison purposes, you should keep in mind that 1 Rand is equivalent to 22.71 Naira.
1 US Dollar is valued at 315.25 Naira. 1 Euro is valued at 352.48 Naira; and 1 British Pound is equal to 398.49 Naira.
So, it doesn’t seem like the Rand is doing that poorly. In fact, all things considered, it might actually look like it’s doing really well.
But when you consider that the when the rand debuted in 1961, it was actually on equal footing with the dollar – you opinion will most likely be changed.
The question is, how did the South African currency have such a disappointing fall?
The Value of The Rand
The Rand derives its name from Witwatersrand.
Witwatersrand, also known as the reef, is a ridge in South Africa’s Gauteng province which Johannesburg was built on.
The South African Rand replaced the South African Pound as legal tender and the official South Africa currency in 1961.
The Rand remained in almost equal value to dollar for over two decades, until 1982.
Growing political pressure and the fallout from apartheid deeply affected the currency’s value.
The change started in small margins, with the dollar trading at 1.30ZAR.
By 1985, the value gap widened the rand was trading at 2 Rand per Dollar. In response, foreign exchange trading was suspended in an attempt to resuscitate the value of the rand.
Unfortunately, the Rand only fell further and on the 15th of August, 1985 – the Rand fell to 2.40 Rand to the dollar.
The value of the Rand eventually recovered but only by a slight margin between 1986-1988 when the Rand traded at 2 Rand against the dollar.
However, by 1989, the value had fallen again to 2.50 Rand
By the early 1990s, a number of local and international factors greatly affected the value of the Rand till it became 3 Rand to the dollar.
The uncertainty of the country’s future as the black majority leadership became apparent, the election of Tito Mboweni as governor of South Africa’s Reserve Bank, the 1994 democratic election, the subsequent election of Thabo Mbeki as president are just some factors that affected the value of the currency.
By 1999, the South African Rand was trading at 6 Rand against the Dollar.
The South African Rand in the New Millennia
By 2001, the Rand reached an all time low of 13.84 Rand against the American Dollar.
This was a result of the September 11 2001 attacks which affected the economies of many countries; a controversial and reform program that commenced in Zimbabwe also played a hand in the currency drop.
The drastic depreciation of the Rand led to an investigation which in turn led to a dramatic value recovery.
The Rand was trading at 9 Rand to the Dollar the end of 2002. By 2005, it was valued at 5.70 Rand to the Dollar.
This upswing was only short lived because by the end of 2005, the South African Rand fell in value again and was trading at 6.35 Rand to the Dollar.
2006 was a year that saw the currency fluctuate – rising in value at the beginning of the year but dropping significantly before the end of the year.
This unfortunate routine continued well into the approaching years and by 2014, the Rand was valued at 15.05 Rand per Dollar.
When President Zuma announced that he was replacing the Finance Minister at the time – Nhlanha Nene with David Van Rooyen, the currency dropped more than 10%.
When the president then retracted and appointed Pravin Gorhdan as Minister of Finance instead, the currency’s value fell even further.
The back and forth of this decision caused the international committee to lose faith in the president’s ability to handle the economy.
By January 2016, the South African Rand was valued at 17.917 Rand per Dollar; although, by April of 2016, the currency rebounded to 14.16 Rand per Dollar.
Another critical drop in value occurred after the United Kingdom voted to exit the European Union. The Rand dropped 8% against the Dollar immediately after this.
However this was not peculiar to the rand as many countries’ currency were affected by the United Kingdom’s decision.
It’s not only the value of the South African Rand that has changed a lot, the appearance of the rand has also changed greatly over the decades; however, that is a conversation for another time