By the end of 2002, the currency was trading under R9 to the dollar again, and by the end of 2004 was trading under R5.70 to the dollar. The currency softened somewhat in 2005, and was trading around R6.35 to the dollar at the end of the year. At the start of 2006, however, the currency resumed its rally, and as of 19 January 2006, was trading under R6 to the dollar again. However, during the second and third quarters of 2006 (i.e. April through September), the rand weakened significantly. The controversial land reform programme that was initiated in Zimbabwe, followed by the September 11, 2001 attacks, propelled it to its weakest historical level of R13.84 to the dollar in December 2001.
The rand was introduced in 1961 and takes its name from the Witwatersrand, the ridge upon which Johannesburg is built and where most of South Africa’s gold deposits were found. By 1992, the exchange rate was 3 rand per 1 US dollar, doubling to more than 6 ZAR/1 USD by 1999 and surging to nearly 14 ZAR/1 USD by 2001. South African Rand refers to the legal currency of the Republic of South Africa. It is also recognized as a legal currency in the Common Monetary Area that it shares with Lesotho, Namibia, and Eswatini, although each country in the monetary union also uses its own currency. This sudden depreciation in 2001 led to a formal investigation, which in turn led to a dramatic recovery.
The 1978 series began with denominations of 2, 5, 10 and 20 rand, with a 50 rand introduced in 1984. This series had only one language variant for each denomination of note. Afrikaans was the first language on the 2, 10, and 50 rand, while English was the first language on the 5 and 20 rand. In sterling terms, it fell from around 9.5% to just over 7%, losing some 25% of its international trade-weighted value in just six months. In late 2007, the rand rallied modestly to just over 8%, only to experience a precipitous slide during the first quarter of 2008.
The terms of the new agreement provided Swaziland with additional flexibility in its monetary policy. The establishment of the Rand Monetary Area (RMA) in 1974 allowed Swaziland, Botswana, and Lesotho to issue currencies unique to their nations. Before the agreement, these countries had participated in an informal arrangement among the same countries where only the South African currency circulated. Interestingly, the SARB remains a wholly-owned private entity with more than 800 shareholders; these shareholders are regulated by owning less than 1% of the total number of outstanding shares. This is to ensure that the interests of the economy precede those of any private individual. To maintain this policy, the governor and 14-member board head the bank’s activities and work toward monetary goals.
By the time that State President P. W. Botha made his Rubicon speech on 15 August 1985, it had weakened to R2.40 per dollar. The currency recovered somewhat between 1986 and 1988, trading near the R2 level most of the time and even breaking beneath it sporadically. The recovery was short-lived, however, and by the end of 1989, the rand was trading at more than R2.50 per dollar. Krugerrands are among the most frequently traded gold coins in the world market.
- The rand comes from the word “Witwatersrand,” which means “white waters ridge.” Johannesburg, the location of a majority of South Africa’s gold deposits, is located on this ridge.
- All South African coins and banknotes are produced and issued by the country’s central bank, the South African Reserve Bank.
- Above all else, the central bank is in charge of the achievement and maintenance of price stability.
- To maintain this policy, the governor and 14-member board head the bank’s activities and work toward monetary goals.
- The coins still have legal tender status in South Africa, although Krugerrands were never assigned a rand value.
Eswatini, Lesotho, and Namibia also peg their currencies to the rand. Above all else, the central bank is in charge of the achievement and maintenance of price stability. This also includes intervention in the forex markets when necessary. Adam Hayes, Ph.D., CFA, is a financial writer with 15+ years Wall Street experience as a derivatives trader. Besides his extensive derivative trading expertise, Adam is an expert in economics and behavioral finance.
Like many dollar-denominated currencies, the rand is divided into 100 cents. All South African coins and banknotes are produced and issued by the country’s central bank, the South African Reserve Bank. Coins were introduced in 1961 in denominations of 1⁄2, 1, 2+1⁄2, 5, 10, 20, and 50 cents. The 1 rand coin for circulation was introduced in 1967, followed by 2 rand coins in 1989 and 5 rand coins in 1994. Production of the 1 and 2 cent coins was discontinued in 2002, followed by 5 cent coins in 2012, primarily due to inflation having devalued them, but they remain legal tender.[28][29][30][31] Shops normally round the total purchase price of goods to the nearest 10 cents. Krugerrands are gold coins that have legal tender status in South Africa but no assigned rand value.
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The name is derived from the word ‘Witwatersrand’, which means ‘ridge of white waters’. The ridge is where most of South Africa’s gold deposits were found and where Johannesburg was built. From 2001 to 2006, the rand recovered about half of its value relative to the US https://www.forexbox.info/bitcoin-to-us-dollar-exchange-rate-chart/ dollar, moving back to an exchange rate of approximately six-to-one (rand to dollar). But then, in 2012, a decline in the key South African industry of mining sparked a fresh decline for the rand. By 2014, it was trading at a rate of slightly more than 15 ZAR/1 USD.
South African Rand (ZAR)
For the most part, the rand’s value was linked to the price of gold, South Africa’s main export, during its early days. In recent years, the rand is somewhat correlated with gold prices as the South African economy still relies on its gold exports. Through the RMA agreement, the South African rand remained legal tender in all member nations and circulated alongside the national money of the member nations. The South African rand is made up of 100 cents and is often presented with the symbol R. The rand comes from the word “Witwatersrand,” which means “white waters ridge.” Johannesburg, the location of a majority of South Africa’s gold deposits, is located on this ridge.
The rand was also one of the emerging market currencies that was hit hard by the 2008 financial crisis and the coronavirus pandemic. As a trading center, multiple currencies circulated throughout South Africa. During the late 17th century, the Rixdollar was used and was the first South African currency to include paper notes. During British occupation, in 1826, the Cape Colony was put on a sterling basis, though other currencies, including Spanish Dollars, US Dollars, French Francs, and Indian Rupees continued to circulate.
The Troubled History of the South African Rand
Modeled on the Bank of England (BoE), the South African Reserve Bank (SARB) stands as the monetary authority for South Africa and issues its currency. Taking on major responsibilities similar to those of other central banks, the SARB is also known as a creditor in certain situations, a clearing bank, and a major custodian of gold. Krugerrands are gold coins that were minted by the Republic of South Africa in 1967 https://www.day-trading.info/6-best-online-stock-trading-platforms-of-2021/ to help promote South African gold to international markets and to make it possible for individuals to own gold. Instead, a series of banknotes containing photos of the country’s treasured wildlife were introduced. Also, in 2012, a rand banknote containing a picture of former President Nelson Mandela was released as part of the Mandela series. South Africa experienced major political changes in the early 1990s.
However, over the ensuing decades, the rand exchange rate has depreciated or weakened, meaning it costs more rand to convert to one U.S. dollar. For example, it had cost approximately R2.55 to convert to one USD in 1990, and by 1999, the exchange rate was R6.14 to the USD. Once you know that information, multiply the misbehavior of markets the amount you have in ZAR by the current exchange rate. The resulting number will show you the amount of USD that you have to spend on your trip. The other option is to do the calculation manually using a simple mathematical formula. However, in order to do this, you need to know the current exchange rate.