{"id":140443,"date":"2016-10-18T10:33:53","date_gmt":"2016-10-18T08:33:53","guid":{"rendered":"http:\/\/businesstech.co.za\/news\/?p=140443"},"modified":"2016-10-18T10:33:53","modified_gmt":"2016-10-18T08:33:53","slug":"how-the-rand-punches-far-above-its-weight","status":"publish","type":"post","link":"https:\/\/businesstech.co.za\/news\/finance\/140443\/how-the-rand-punches-far-above-its-weight\/","title":{"rendered":"How the rand punches far above its weight"},"content":{"rendered":"

The South African rand is one of the most traded currencies in the world – and despite the country being a much smaller market than its BRICS bedfellows, it’s able to match, if not defeat them in the trade game.<\/p>\n

This is according to the 2016 BIS Triennial Central Bank Survey<\/a><\/strong>, which tracks the size and structure of the global foreign exchange markets.<\/p>\n

The survey revealed that trading in foreign exchange markets averaged $5.1 trillion per day in 2016 (April) with the US dollar remaining the dominant vehicle currency, being on one side of 88% of all trades.<\/p>\n

Trade in South Africa’s rand has declined since the last report in 2013<\/a><\/strong>, slipping from being the 18th most traded currency in the world (1.1% of all trades) to being ranked 20th (1.0% of all trades).<\/p>\n

In terms of volume, South Africa makes up $51 billion in daily turnover – the same level as other BRICS nations Brazil ($51 billion), Russia and India (both $58 billion).<\/p>\n

The Chinese yuan is the outlier at $202 billion – but remains relatively small, compared to its market size.<\/p>\n

Total currency trade value and share<\/strong><\/p>\n

\n
\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n
#<\/th>\nCurrency<\/th>\nTrade value ($bn)<\/th>\nTrade share<\/th>\n<\/tr>\n
1<\/td>\nUS dollar<\/td>\n$4 458<\/td>\n87.6%<\/td>\n<\/tr>\n
2<\/td>\nEuro<\/td>\n$1 591<\/td>\n31.3%<\/td>\n<\/tr>\n
3<\/td>\nJapanese yen<\/td>\n$1 097<\/td>\n21.6%<\/td>\n<\/tr>\n
4<\/td>\nBritish pound<\/td>\n$650<\/td>\n12.8%<\/td>\n<\/tr>\n
5<\/td>\nAustralian dollar<\/td>\n$353<\/td>\n6.9%<\/td>\n<\/tr>\n
6<\/td>\nCanadian dollar<\/td>\n$261<\/td>\n5.1%<\/td>\n<\/tr>\n
7<\/td>\nSwiss franc<\/td>\n$243<\/td>\n4.8%<\/td>\n<\/tr>\n
8<\/td>\nChinese yuan<\/td>\n$202<\/td>\n4.0%<\/td>\n<\/tr>\n
9<\/td>\nSwedish krona<\/td>\n$112<\/td>\n2.2%<\/td>\n<\/tr>\n
10<\/td>\nMexican peso<\/td>\n$113<\/td>\n2.2%<\/td>\n<\/tr>\n
<\/td>\n<\/td>\n<\/td>\n<\/td>\n<\/tr>\n
20<\/td>\nSouth African rand<\/td>\n$51<\/td>\n1.0%<\/td>\n<\/tr>\n<\/tbody>\n<\/table><\/div>\n<\/div>\n

Trade share adds up to 200%, as\u00a0two currencies are involved in each transaction<\/em><\/p>\n

South African rand packs a punch<\/strong><\/p>\n

According to economic expert Jayson Coomer – the Rolling Alpha<\/a><\/strong> – when looking at South Africa’s trade turnover relative to the country’s GDP and Gross Trade, it is clear that the country punches above its weight class.<\/p>\n

With turnover of $51 billion, and nominal GDP at $350 billion (UN, 2014), the rand has relatively high trade volumes, accounting for 15% of GDP (the 12 highest in the wotld).<\/p>\n

Currency trade value as % of GDP<\/strong><\/p>\n

\n
\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n
#<\/th>\nCurrency<\/th>\nTrade value ($bn)<\/th>\nNominal GDP ($bn)<\/th>\nTurnover as % of GDP<\/th>\n<\/tr>\n
1<\/td>\nNew Zealand dollar<\/td>\n$105<\/td>\n$199<\/td>\n53%<\/td>\n<\/tr>\n
2<\/td>\nSwiss franc<\/td>\n$243<\/td>\n$701<\/td>\n35%<\/td>\n<\/tr>\n
3<\/td>\nHong Kong dollar<\/td>\n$88<\/td>\n$274<\/td>\n32%<\/td>\n<\/tr>\n
4<\/td>\nSingapore dollar<\/td>\n$91<\/td>\n$308<\/td>\n30%<\/td>\n<\/tr>\n
5<\/td>\nUS dollar<\/td>\n$4 458<\/td>\n$17 348<\/td>\n26%<\/td>\n<\/tr>\n
6<\/td>\nAustralian dollar<\/td>\n$353<\/td>\n$1 471<\/td>\n24%<\/td>\n<\/tr>\n
7<\/td>\nJapanese yen<\/td>\n$1 097<\/td>\n$4 602<\/td>\n24%<\/td>\n<\/tr>\n
8<\/td>\nBritish pound<\/td>\n$650<\/td>\n$2 989<\/td>\n22%<\/td>\n<\/tr>\n
9<\/td>\nSwedish krona<\/td>\n$112<\/td>\n$571<\/td>\n20%<\/td>\n<\/tr>\n
10<\/td>\nNorwegian krone<\/td>\n$85<\/td>\n$501<\/td>\n17%<\/td>\n<\/tr>\n
<\/td>\n<\/td>\n<\/td>\n<\/td>\n<\/td>\n<\/tr>\n
12<\/td>\nSouth African rand<\/td>\n$51<\/td>\n$350<\/td>\n15%<\/td>\n<\/tr>\n<\/tbody>\n<\/table><\/div>\n<\/div>\n

Looking at the figure relative to gross trade – imports and exports – ($166 billion, 2014), it’s even stronger, ranking 11th at 31%.<\/p>\n

When compared to other emerging markets, South Africa ranks as the most traded emerging market currency by this metric.<\/p>\n

Currency trade value as % of gross trade<\/strong><\/p>\n

\n
\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n
#<\/th>\nCurrency<\/th>\nTrade value ($bn)<\/th>\nGross Trade ($bn)<\/th>\nTurnover as % of Gross Trade<\/th>\n<\/tr>\n
1<\/td>\nNew Zealand dollar<\/td>\n$105<\/td>\n$70<\/td>\n150%<\/td>\n<\/tr>\n
2<\/td>\nUS dollar<\/td>\n$4 458<\/td>\n$3 783<\/td>\n118%<\/td>\n<\/tr>\n
3<\/td>\nAustralian dollar<\/td>\n$353<\/td>\n$396<\/td>\n89%<\/td>\n<\/tr>\n
4<\/td>\nJapanese yen<\/td>\n$1 097<\/td>\n$1 249<\/td>\n88%<\/td>\n<\/tr>\n
5<\/td>\nBritish pound<\/td>\n$650<\/td>\n$1 064<\/td>\n61%<\/td>\n<\/tr>\n
6<\/td>\nNorwegian krone<\/td>\n$85<\/td>\n$179<\/td>\n47%<\/td>\n<\/tr>\n
7<\/td>\nSwiss franc<\/td>\n$243<\/td>\n$552<\/td>\n44%<\/td>\n<\/tr>\n
8<\/td>\nSwedish krona<\/td>\n$112<\/td>\n$288<\/td>\n39%<\/td>\n<\/tr>\n
9<\/td>\nEuro<\/td>\n$1 591<\/td>\n$4 503<\/td>\n35%<\/td>\n<\/tr>\n
10<\/td>\nCanadian dollar<\/td>\n$261<\/td>\n$840<\/td>\n31%<\/td>\n<\/tr>\n
<\/td>\n<\/td>\n<\/td>\n<\/td>\n<\/td>\n<\/tr>\n
11<\/td>\nSouth African rand<\/td>\n$51<\/td>\n$166<\/td>\n31%<\/td>\n<\/tr>\n<\/tbody>\n<\/table><\/div>\n<\/div>\n

According to Coomer, China’s low positioning on the list is the “elephant in the room”, as its trade is completely out of sync with the size of its economy.<\/p>\n

“(This) suggests that the global traders must be using something as a proxy for the yuan trades that they can\u2019t do,” he said.<\/p>\n

More on currency<\/h3>\n

The most traded currencies in the world<\/a>\u00a0(2013)<\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"

The South African rand is one of the most traded currencies in the world – and despite the country being a much smaller market than its BRICS bedfellows, it’s able to match, if not defeat them in the trade game.<\/p>\n","protected":false},"author":10,"featured_media":114834,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11121],"tags":[26],"class_list":["post-140443","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-finance","tag-headline"],"_links":{"self":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/140443","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/users\/10"}],"replies":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/comments?post=140443"}],"version-history":[{"count":1,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/140443\/revisions"}],"predecessor-version":[{"id":140447,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/140443\/revisions\/140447"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media\/114834"}],"wp:attachment":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media?parent=140443"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/categories?post=140443"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/tags?post=140443"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}