South African rand

South African rand
South African Banknotes 2012 circulation – starting 6 November 2012.
ISO 4217 code	ZAR
Central bank	South African Reserve Bank
Website	www.reservebank.co.za
Official user(s)	South Africa (Common Monetary Area member)  Lesotho (Common Monetary Area member), alongside Lesotho loti  Namibia (Common Monetary Area member), alongside Namibian dollar  Swaziland (Common Monetary Area member), alongsde Swazi lilangeni
Unofficial user(s)	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	10c, 20c, 50c, R 1, R 2, R 5
Banknotes	R 10, R 20, R 50, R 100, R 200

The rand (sign: R; code: ZAR) is the currency of South Africa. The rand has the symbol "R" and is subdivided into 100 cents, symbol "c". Unlike the dollar, the decimal separator between a rand and cent is expressed by a comma. The ISO 4217 code is ZAR, from Dutch Zuid-Afrikaanse Rand (South African rand). The rand is the currency of the Common Monetary Area between South Africa, Swaziland and Lesotho. Although Namibia withdrew from this union, the rand is still legal tender there.

Historical users of the South African rand included South-West Africa and the nominally independent bantustans under the apartheid system: Bophuthatswana, Ciskei, Transkei and Venda.

Etymology

It takes its name from the Witwatersrand (literally "white waters' ridge" in English), the ridge upon which Johannesburg is built and where most of South Africa's gold deposits were found.

History

The cent was introduced in the then Union of South Africa on 14 February 1961, three months before the Republic of South Africa was established.^[2] 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 to 1 pound, or 10 shillings to the rand. The government introduced a mascot, Decimal Dan, "the rand-cent man" (known in Afrikaans as Dan Desimaal).^[4] This was accompanied by a radio jingle, to inform the public about the new currency.^[5]

Brief exchange rate history

Value of the South African rand to the United States dollar from 1975 to 2015 by the blue columns. The percentage rate of change year-on-year is shown by the black line.^[6]

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 due to 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 R 2 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 R 2.40 per dollar. The currency recovered somewhat between 1986–88, trading near the R 2 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 R 2.50 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.

Two generations of older notes and coins. The notes of the latter of these two generations (as depicted by the R5 note in this image) were replaced with the iconic "Big Five" notes and these were recently updated to show the face of Nelson Mandela.

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.

By the end of 2014 the Rand had weakened to R 15.05 per dollar partly due to South Africa's consistent trade account deficit with the rest of the world.

From 9 December 2015 to 13 December 2015, over a four-day period, the rand dropped by over ten percent due to President Zuma's surprise announcement that he would be replacing the then Finance Minister Nhlanhla Nene with the little known David van Rooyen. The rapid drop in value was stemmed when the President back-tracked and announced that the better known previous Minister of Finance, Pravin Gordhan, would instead be appointed to the post. Zuma's surprise firing of Nene damaged international confidence in the rand with it experiencing significant exchange volatility throughout much of January 2016, reaching an all-time low of R 17.9169 to the US dollar on the 9 January 2016 before rebounding to R 16.57 later in the same day.^[7] The January drop in value was also partly caused by Japanese retail investors cutting their losses in the currency to look for higher-yield investments elsewhere and due to concerns over the impact of the economic slowdown in China, South Africa's largest export partner.^[8] By mid-January economists were speculating that the rand could expect to see further volatility for the rest of 2016.^[9][10]

Coins

A 5 Rand bi-metallic coin issued in 2004.

Coins were introduced in 1961 in denominations of ¹⁄₂, 1, 2 ¹⁄₂, 5, 10, 20, and 50 cents. In 1965, 2-cent coins replaced the 2 ¹⁄₂-cent coins. The ¹⁄₂-cent coin was last struck for circulation in 1973. The 2-rand coin was introduced in 1989, followed by 5-rand coins in 1994. Production of the 1- and 2-cent coins were discontinued in 2002, primarily due to inflation having devalued them, but they remain legal tender.^[11][12][13] Shops normally round the total purchase price of goods to the nearest 5 cents (in favour of the consumer).

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.^[14]

Banknotes

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, what was believed at the time to be Jan van Riebeeck, the first V.O.C. administrator of Cape Town. It was later discovered that the image was not in fact Van Riebeeck at all.^[15] 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. The 1-rand note was replaced by a coin.

In the 1990s, the notes were redesigned with images of the Big Five wildlife species. 10-, 20- and 50-rand notes were introduced in 1992, retaining the colour scheme of the previous issue. Coins were introduced for 2 rand and 5 rand, replacing the notes of the previous series, mainly because of the severe wear and tear experienced with low denomination notes in circulation. In 1994 notes were introduced 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, thus making use of all eleven official languages of South Africa.

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.^[16]

In 2011, the South African Reserve Bank issued 100-rand banknotes which were defective because they lacked fluorescent printing visible under UV light. In June, printing of this denomination was moved from the South African Bank Note Company to Crane Currency’s Swedish division (Tumba Bruk), which reportedly produced 80 million 100-rand notes.^[17] The South African Reserve Bank shredded 3.6 million 100-rand banknotes printed by Crane Currency because they had the same serial numbers as a batch printed by the South African Bank Note Company. In addition, the notes printed in Sweden were not the correct colour, and they were one millimetre short.^[18]

On 11 February 2012, President Jacob Zuma announced that the country would be issuing a complete set of banknotes bearing Nelson Mandela's image.^[19][20] They were entered into circulation on 6 November 2012.^[21]

In 2013, the 2012 series was updated with the addition of the EURion constellation to all five notes.^[22]

First series

Second series

Third series

Fourth series

Fifth series

See also

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

References

Further reading

External links

• 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.

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