South African rand

South African rand
Suid-Afrikaanse rand (Afrikaans)
New 5 rand (2004)
ISO 4217 code	ZAR
Official user(s)	South Africa (Common Monetary Area member)  Lesotho (Common Monetary Area member), alongside Lesotho loti  Namibia, alongside Namibian dollar
Unofficial user(s)	Swaziland (Common Monetary Area member), alongside Swazi lilangeni  Zimbabwe[1]
Inflation	3.6% (South Africa only)
Source	South African Reserve Bank, November 2010
Method	CPI
Pegged with	Lesotho loti, Swazi lilangeni and Namibian dollar at par
Subunit
1/100	Cent
Symbol	R
Cent	c
Plural	Rand
Coins	5c, 10c, 20c, 50c, R 1, R 2, R 5
Banknotes	R 10, R 20, R 50, R 100, R 200
Central bank	South African Reserve Bank
Website	www.reservebank.co.za

The rand (sign: R; code: ZAR) is the currency of South Africa. It takes its name from the Witwatersrand (White-waters-ridge in English), the ridge upon which Johannesburg is built and where most of South Africa's gold deposits were found. The rand has the symbol "R" and is subdivided into 100 cents, symbol "c". The ISO 4217 code is ZAR, from Dutch Zuid-Afrikaanse rand. (South African Rand). This is echoed in South Africa's internet top-level domain name ".za" from the Dutch Zuid-Afrika, meaning "South Africa".^[2]

The rand is the currency of the Common Monetary Area between South Africa, Swaziland and Lesotho. Although Namibia withdrew itself from the Common Monetary Area, the rand is still legal tender there.

History

The rand was introduced on 14 February 1961. A Decimal Coinage Commission had been set up in 1956 to consider a move away from the denominations of pounds, shillings and pence, submitting its recommendation on 8 August 1958.^[3] It replaced the South African pound as legal tender, at the rate of 2 rand = 1 pound or 10 shillings to the rand. This took place in the same year that the Republic of South Africa was established.

Brief exchange rate history

A rand was worth US $ 1.40 from the time of its inception in 1961 until 1982, when mounting political pressure combined with sanctions placed against the country because of apartheid started to erode its value. The currency broke above parity with the dollar for the first time in March 1982, and continued to trade between R 1–R 1.30 to the dollar until June 1984, when depreciation of the currency gained momentum. By February 1985, it was trading at over R2 per dollar, and, in July that year all foreign exchange trading was suspended for 3 days to try to stop the devaluation.

By the time that State President PW Botha made his Rubicon speech on 15 August 1985, it had weakened to R2.40 per dollar. The currency recovered somewhat between 1986–88, 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 levels of more than R2.50 per dollar.

As it became clear in the early 1990s that the country was destined for black majority rule and one reform after the other was announced, uncertainty about the future of the country hastened the depreciation until the level of R 3 to the dollar was breached in November 1992. A host of local and international events influenced the currency after that, most notably the 1994 democratic election which saw it weaken to over R 3.60 to the dollar, the election of Tito Mboweni as the new governor of the South African Reserve Bank, and the inauguration of President Thabo Mbeki in 1999 which saw it quickly slide to over R 6 to the dollar. The controversial land reform program that was kicked off in Zimbabwe, followed by the September 11, 2001 attacks, propelled it to its weakest historical level of R 13.84 to the dollar in December 2001.

Older notes and coins, no longer legal tender.

This sudden depreciation in 2001 led to a formal investigation, which in turn led to a dramatic recovery. By the end of 2002, the currency was trading at under R 9 to the dollar again, and by the end of 2004 was trading at under R 5.70 to the dollar. The currency softened somewhat in 2005, and was trading at around R 6.35 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 at under R 6 to the dollar again. However, during the second and third quarters of 2006 (i.e. April through September), the rand weakened significantly.

In sterling terms, it fell from around 9.5p to just over 7p, losing some 25% of its international trade-weighted value in just six months. Late in 2007, the rand rallied modestly to just over 8p, only to experience a precipitous slide during the first quarter of 2008.

This downward slide could be attributed to a range of factors: South Africa's worsening current account deficit, which widened to a 36‑year high of 7.3% of gross domestic product (GDP) in 2007; inflation at a five-year high of just under 9%; escalating global risk aversion as investors' concerns over the spreading impact of the sub-prime crisis grew; and a general flight to "safe havens", away from the perceived risks of emerging markets. The rand depreciation was exacerbated by the Eskom electricity crisis, which arose from the utility being unable to meet the country's rapidly growing energy demands.

In particular, major mines were shut down, with Eskom warning that major new industrial projects could not be powered until additional power generation capacity could be brought on stream, something unlikely to be achieved for at least another 5 years. This would have a significant impact on production and exports by South Africa's mining industry, and would thus worsen an already worrisome current account deficit. It is particularly unfortunate that this should have happened at a time of record high prices for hard and soft commodities. The situation has since stabilised.

Coins

Main article: Coins of the South African rand

Coins were introduced in 1961 in denominations of ½, 1, 2½, 5, 10, 20, 50 cents. In 1965, 2-cent coins replaced the 2½-cent coins. The ½-cent coin was last struck for circulation in 1973. The 2-rand was introduced in 1989, followed by 5-rand coins in 1994. The 1- and 2-cent coins were discontinued in April 2002, primarily due to inflation having devalued them. All prices are now rounded to the nearest 5 cents.

In an effort to curb counterfeiting, a new R 5 coin was released in August 2004. Security features introduced on the coin include a bi-metal design (similar to the €1 and €2 coins, the Thai 10 Baht coin, the British £2 coin and the Canadian $2 coin), a specially-serrated security groove along the rim and micro-lettering.^[4]

Banknotes

The 2005 series.

The first series of rand banknotes was introduced in 1961 in denominations of 1, 2, 10 and 20 rand, with similar designs and colours to the preceding pound notes to ease the transition. They bore the image of Jan van Riebeeck, the first V.O.C. administrator of Cape Town. Like the last pound notes, they came in two variants, one with English written first and the other with Afrikaans written first. This practice was continued in the 1966 series which included the first 5 rand notes but did not include the 20 rand denomination.

The 1978 series began with denominations of 2, 5 and 10 rand, with 20 and 50 rand introduced in 1984. This series saw a major design change. In addition, the series has only one 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 5 and 20 rand. The notes bore the image of Jan van Riebeeck.

In the 1990s, the notes were redesigned with images of the Big Five wildlife species. With the 2 and 5 rand coins replacing notes, notes were introduced in 1994 for 100 and 200 rand.

The 2005 series has the same principal design, but with additional security features such as colour shifting ink on the 50 rand and higher and the EURion constellation. The obverses of all denominations are printed in English, while two other languages are printed on the reverses, making all eleven official languages of South Africa available.

In 2010, the South African Reserve Bank and commercial banks withdrew all 1990 series R 200 banknotes due to relatively high quality counterfeit notes in circulation.^[5]

Current ZAR exchange rates
From Google Finance:	AUD CAD CHF EUR GBP HKD JPY USD
From Yahoo! Finance:	AUD CAD CHF EUR GBP HKD JPY USD
From OzForex:	AUD CAD CHF EUR GBP HKD JPY USD
From XE.com:	AUD CAD CHF EUR GBP HKD JPY USD
From OANDA.com:	AUD CAD CHF EUR GBP HKD JPY USD

See also

• Financial rand
• Witwatersrand
• Krugerrand
• Economy of South Africa

References

1. ^ Alongside Zimbabwean dollar (suspended indefinitely from 12 April 2009), euro, US dollar. Pound sterling and Botswana pula. The US dollar has been adopted as the official currency for all government transactions.
2. ^ http://acronyms.thefreedictionary.com/Zuidafrikaanse+Rand+(South+African+Rand) The Free Dictionary
3. ^ Mboweni, T. T. 2001. The Reserve Bank and the Rand: some historic reflections. Speech by the Governor of the Reserve Bank 29 Nov 2001. www.reservebank.co.za.
4. ^ "South Africa's new R5 coin". SouthAfrica.info. 28 July 2004. http://www.southafrica.info/services/consumer/fiverandcoin.htm. 
5. ^ "Statement issued by the SARB Governor, Ms G Marcus on counterfeit notes in circulation". South African Reserve Bank. 2010-04-21. http://www.reservebank.co.za/internet/publication.nsf/WhatsNew/17008C92436B903E4225770C004F3D00?opendocument. Retrieved 2010-05-25. 

Further reading

• Krause, Chester L. and Clifford Mishler (1991). Standard Catalog of World Coins: 1801–1991 (18th ed. ed.). Krause Publications. ISBN 0873411501. 
• Pick, Albert (1994). Standard Catalog of World Paper Money: General Issues. Colin R. Bruce II and Neil Shafer (editors) (7th ed.). Krause Publications. ISBN 0-87341-207-9. 

External links

External audio
	Decimal Dan - A radio promotion used during the conversion from Pound to Rand

• US Federal Reserve Bank historical exchange rate data
• South African Currency Page, with a short description of each note.
• South African Currency Page (old rand), a short description of pre-1994 (apartheid-era) notes.

Preceded by: South African pound Reason: decimalization Ratio: 2 rand = 1 South African pound = 1 British pound	Currency of South Africa 1961 –			Succeeded by: Current
	Currency of South West Africa 1961 – 1990 Note: administered by/occupied by South Africa since 1915	Currency of Namibia 1990 – 1993	Legal tender in Namibia 1993 –	Succeeded by: Namibian dollar Reason: withdrawal from Common Monetary Area Ratio: at par Note: dollar introduced in 1993, with South African rand remaining legal tender
	Currency of Basutoland 1961 – 1966	Currency of Lesotho 1966 – 1980	Legal tender in Lesotho 1980 –	Succeeded by: Lesotho loti Note: loti introuced in 1980, with South African rand remaining legal tender
	Currency of Swaziland 1961 – 1974	Legal tender in Swaziland 1974 – 1986	Circulates in Swaziland 1986 –	Succeeded by: Swazi lilangeni Note: lilangeni introduced in 1974. South African rand continues to circulate unofficially
	Currency of Bechuanaland Protectorate 1961 – 1966	Currency of Botswana 1966 – 1976		Succeeded by: Botswana pula Reason: creation of independent currency Ratio: at par