The rand has experienced one of its worst years against the US dollar – dipping to new 4 year lows against the greenback.
The currency faced a tough 2013, opening on the lows brought about by a stalled mining industry in late 2012, and remained sensitive to the struggling European economy in the first half of the year.
In late May, however, the rand dipped to a new 4-year low, breaking through the R10 to the dollar mark after threatening to do so after the reporting of disappointing quarterly growth figures.
Since the big decline in May, the rand continued to zig-zag between R9.50 and R10.50, having hit its lowest US close at R10.50 on 5 December 2013, according to xe.com – the day of Nelson Mandela’s passing, though analysts noted that it was US data that impacted the drop, not Madiba’s death.
In general, economists and labour organizations have been divided on what the depreciation of the rand means for South Africa – with some seeing opportunity to stimulate growth, and others seeing wide-spread failure and tough economic times.
Late November, Reuters reported that, in the long-terms, “the rand will remain vulnerable to gaping deficits in the national budget and current account, which has earned it a position in the so-called ‘fragile five’ group of emerging markets along with Turkey, India, Brazil and Indonesia.”
In the tech space, and the positive side, the soft rand helped boost media and Internet company, Naspers to a new record high on the JSE – shooting past R1,000 for the first time, making it one of the most valuable companies in South Africa.
However, retailers and consumers are less enthusiastic about the rand’s positioning, as the prices of tech goods have risen as a result of the rand’s poor performance.
According to xe.com’s data, despite the Rand hitting new four-year lows in 2013, the currency is still a way off from its lowest point – R11.78, which was the currency’s trade close on 23 October, 2008.
Rand versus the dollar in 2013
|1 January 2013||R8.46|
|18 December 2013||R10.36|
|Highest close – 5 December 2013||R10.50|
|Lowest close – 1 January 2013||R8.46|
* Prices taken from xe.com (accessed 18 December 2012) and represent the rand value at close of markets (PST).