A history of South Africa’s currency

 ·23 Sep 2012
South African money rand

The rand was established as the official South African currency on 14 February 1961 – and has since developed into a liquid emerging market currency, most commonly traded against the US dollar.

Prior to its establishment as legal tender, South Africa, as a British colony, operated under the British tender of pence, pounds and shillings.

When the rand debuted, it traded at R2 to the pound, or 10 shillings to the rand. Coming off of the strong base of the “South African Pound” was valued, as a yearly average, stronger than the US dollar, debuting at 72 cents to the dollar in 1961.

A currency in decline

Despite enjoying strong value amid an ever-changing international economic climate, it was the system of Apartheid in South Africa which ultimately caused rand to lose its footing on the global market.

In June 1974 the South African authorities decided to delink the rand from the dollar, and introduced a policy of independent managed floating. At the time, the Rand was trading at 87 cents to the dollar.

Speaking in 2001, then-SARB governer, Tito Mboweni explained that during the period of 1974 to 1978 – the level at which the rand was pegged to the dollar had been changed six times.

In the 1980, there was a significant boom in the value of gold, which strengthened the rand’s value – however, the same was true when the value of gold declined thereafter.

In 1983, the aprtheid government abolished the financial rand exchange rate system and key international banks refused to renew credit lines for South Africa, which forced the temporary closure of the foreign-exchange market in the country.

In 1985, the rand was at its worst level versus the dollar since its inception, at R2.23.


Since the democratic elections in 1994, some normality has returned to South Africa’s international relations, but the exchange rate of the rand against the US dollar remained in a long-term downward trend that commenced in the early 1980s.

The rand/dollar exchange in the post-apartheid South Africa had been largely impacted by national and international social, political and economic events, remaining in decline.

Political uncertainty surrounding the new government in the country saw the rand weaken to an average R3.55 versus the dollar in 1994.

At the next presidential elections in 1999, the election of Thabo Mbeki as president sent the rand’s value to an average of R6.11.

The 2001 September 11 attacks on the World Trade Center in the USA caused the rand to skyrocket to R13.84 to the dollar (year average of R8.60) – its worst level ever – with a recovery period happening the following year.

Rand versus Dollar since 2002

The last decade has had its own fair share of issues which impacted the rand/dollar exhange rate, particularly in the latter half of the decade (2007 onwards).

Local events, such as increasing debt, socio-political unrest and energy issues have kept the rand in a weakened position.

Eskom’s power crisis in 2007 caused major issues in the mining and telecommunications sector, ultimately leading to massive production cuts and mine closures. This caused the rand’s value to spike up from just above R6 to the dollar in 2006, to over R7 in 2007.

Most recently, the European sovereign debt crisis has had a massive impact on the global economy and, by extension, the local currency.

The euro-crisis is in itself an extension of the global recession which followed the “global financial crisis” in 2007 – which sent global markets, South Africa included, into troubled waters.

By 15:00pm (12 September 2012) the rand was trading at R8.34 to the dollar, under pressure from unrest in South Africa’s mining sector, as well as continued uncertainty pertaining the euro-zone crisis.

Rands to buy $1

Year Rand to Dollar
2002 10.5176
2003 7.5550
2004 6.4402
2005 6.3606
2006 6.7668
2007 7.0477
2008 8.2480
2009 8.4117
2010 7.3161
2011 7.2510
2012 8.3430

Rand values are nominal measures from measuringworth.com (accessed 12 Spetember 2012).

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