When the rand was stronger than the dollar

The rand recently hit its worst-ever level of R19.93 against the dollar amid market panic over US President Donald Trump’s tariffs and concerns over the Government of National Unity’s (GNU’s) future.

The unit recovered slightly at the start of the week following Trump’s order to pause ‘reciprocal’ tariffs that were to kick in on 9 April.

This included a 30% tariff on South African goods, which has now been reduced to the global minimum of 10%.

However, while this served as a decent boost for the rand, it was not enough to push it back towards the stronger levels seen in the latter months of 2024.

With the rand’s poor performance, it may be difficult for many South Africans to believe that the currency was once stronger than the dollar.

The rand’s depreciation against the dollar over the last decade has been so severe that it hasn’t been in the single digits since October 2013.

The rand was introduced in the Union of South Africa in 1961, three months before the country was declared a republic and separated from the Commonwealth.

The new system of rands and cents was introduced at the time, with US$1.00 equal to R0.71 and £1.00 equal to R2.00.

The rand would remain stronger than the US dollar for over two decades despite extreme volatility in the exchange rate market during this time.

By 1978, the rand was pegged to the dollar six different times. The post-apartheid South African Reserve Bank (SARB) criticised the constant realignments, stating that they had limited, if any, benefits.

Nevertheless, the local currency remained stronger than the world’s largest economy despite the extreme volatility of global exchange rates. 

From R0.72 to R19.93 to the dollar

In 1982, the rand finally became weaker than the US dollar. Due to heightened political pressure and high inflation, its value remained highly volatile for the following two years.

After the currency broke R2 to the dollar, foreign exchange trading was suspended for three days to stop further depreciation.

The rand continued to trade around the R2 mark for the rest of the 1980s but hit over R3 at the start of the early 1990s amidst fears over South Africa’s transition to democracy.

By 1999, the rand had depreciated to over R6 to the dollar after Thabo Mbeki took over as President and Titi Mboweni took over at the South African Reserve Bank.

It depreciated rapidly in 2001 following the 9/11 terrorist attacks, leading the rand to hit just under R14 to the dollar that year.

However, the sudden depreciation was reversed, with the rand recovering to under R6 to the dollar by 2004.

The currency would then weaken heavily over the following decade due to a widening current account deficit, the start of load shedding in 2007, and heightened levels of corruption.

Things came to a head in 2015 as the extent of state capture in South Africa was laid bare.

The rand depreciated by 10% in just four days after President Jacob Zuma announced that he would replace Finance Minister Nhlanhla Nene with then-ANC backbencher Des van Rooyen in December 2015. 

The removal of Nene destroyed investor confidence in South Africa in an instant, forcing Zuma to reverse the decision and appoint the late Pravin Gordhan shortly thereafter.

However, despite the reversal, the rand would continue to suffer in the following years, with ratings agencies Fitch and S&P Global placing the country into junk status in 2017. Moody’s followed suit in 2020.

The rand did see some gains when Cyril Ramaphosa became President in 2018. However, the COVID-19 outbreak in 2020 caused the rand to suffer along with global markets.

It hit over R18 to the dollar that year.

The rand recovered briefly under Ramaphosa, but dropped again when he started facing political backlash over the Phala Phala scandal.

Ramaphosa faced a motion of no-confidence in 2022, with the rand reeling amid reports that he might resign.

Although Ramaphosa ultimately survived, extreme load shedding and a weak economic performance led to the rand hitting over R19 to the dollar in May 2023.

The rand would strengthen again in 2024 following over 300 days of no load shedding and the Government of National Unity (GNU) forming after the national election.

The GNU, including the business-friendly DA and IFP, restored considerable investor confidence in South Africa.

However, the recent passing of the 2025 National Budget, which includes a controversial one percentage point increase in VAT, without the support of the DA has thrown doubt over its GNU membership.

Along with the aforementioned tensions with the USA, the GNU’s unsure future means that the rand remains close to its highest level in history. 

Rand vs dollar history