The South African rand is the subject of this weeks Currency Spotlight. As well as being the official currency of South Africa, it’s also the currency of the Common Monetary Area – South Africa, Swaziland, and Lesotho. Namibia also recognizes the rand as legal tender, though the country has left the CMA.
Fast Facts: South African Rand
- South African Rand Symbol: R
- South Africa Currency Code: ZAR
- Coins: 10c, 20c, 50c, R 1, R 2, R 5
- Notes: R 10, R 20, R 50, R 100, R 200
- South African GDP: US$341.216 billion
- Central Bank: South African Reserve Bank (SARB)
The South African rand was adopted in 1961 as the country’s official currency, replacing the South African pound. This was the same year in which South Africa became a republic – no longer ruled by the British Monarchy. The name ‘rand’ comes from the Witwatersrand – a ridge close to Johannesburg. Witwatersrand (ridge of white waters) was famous for the large amounts of gold located and extracted from deposits there.
The changing designs on the South African rand (from a Dutch administrator to Nelson Mandela) offers a snapshot of the history of the country. The value of the rand is also closely linked with the tumultuous time period around the end of apartheid in the late 80’s and early 90’s.
Notes and Coins
The first notes (initially in denominations of 1, 2, 10, and 20 rand) featured Jan van Riebeeck on the front. Riebeeck was the first administrator of South Africa for the Dutch East India Company and founder of Cape Town. These notes could be found with either English or Afrikaans written first depending on what variety you got. After some updates to denominations and language in the late 70’s and early 80’s, there was a third release in 1992, after the end of apartheid, featuring the ‘big five’ animals of Africa (lion, elephant, buffalo, leopard, and rhinoceros) on one side and various South African industries on the other. In 2005, the notes were amended to include the other official languages beyond English and Afrikaans. Finally, in 2012, the fifth series was released with Nelson Mandela’s image on one side and the ‘big five’ on the other.
Coins have changed denominations, design, and languages throughout the years too. Initially the coins featured van Riebeeck, today the most prominent features are the South African coat of arms along with 2 of the 11 official languages. 1c, 2c, and 5c coins are no longer minted, though they are still accepted as legal tender despite the lack of coins in circulation today.
From 1961 to 1982, the ZAR was worth 1.40 USD. Eventually, increased pressure (both from internal politics and international sanctions) would start to weaken the value of the ZAR. Though it did at one point reach approximate parity with the USD, this would be followed by a steady decline. In July 1985, with the value at over R 2 per USD, all trading was suspended for 3 days to try to stop the devaluation.
The end of apartheid and the transition to fully democratic elections only increased the uncertainty surrounding the ZAR. In November 1992, the value was over R 3 per USD. More political changes, coupled with problematic regional affairs and the 9/11 attacks resulted in the value during December 2001 sitting at R 13.84 per USD – a historical low.
Since then, the ZAR has been valued as high as 5.6651 to 1 USD on December 31, 2004. After that high, the value has – for the most part – declined in relation to the USD, though there was a period of appreciation from 2009-2010. This decline is partly due to a large account deficit, high inflation levels, and an industry/energy crisis – particularly involving the closing of mines.
At the time of writing (6:15pm March 26, 2015), the value is 11.9958 ZAR per 1 USD.
The South African economy is the second largest in Africa, behind only Nigeria. Rare among African economies, it is considered an upper-middle income economy by the World Bank – something shared by only 3 others in Africa. Despite uncertainty involving the value of the rand, the end of apartheid (and subsequent lifting of international sanctions) has contributed to the near tripling of South Africa’s GDP.
The South African economy is diverse and robust, with agriculture, mining, and manufacturing all major sectors. Mining in particular has contributed to the country becoming the most developed in Africa. Since 1867, diamond, gold, coal, and more has all been mined for use both internally and exported around the world. Today, the mining industry contributes 60% of all exports, though its percentage of the total GDP has diminished.
Despite struggling with the Global Financial Crisis, the country has recovered in many ways through both private and public consumption. However, unemployment remains arguably the biggest issue faced by the country. It’s estimated that at least 25% of the population is unemployed, though that number is almost certainly higher when you consider those that have given up looking for work. Beyond this, the related issues of inequality and high crime levels are considered some of the biggest challenges the South African economy (and the country in general) has to face going forward.
While the South African economy and value of the rand do have their issues, the country remains the most developed and arguably most robust in Africa. A large amount of viable industries (from mining to tourism) can help South Africa move forward. However the high unemployment and inequality levels will continue to contribute to crime and other problems as long as they continue.
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