\u201cThe rand\u2019s value against other major currencies has attracted considerable attention recently, highlighting its volatility and vulnerability to the market, and there are several factors that affect the rand\u2019s exchange rate,\u201d it said.<\/p>\n
For one, \u201cpolitical and economic uncertainty has significantly influenced the rand in the past 10 years and resulted in the currency seeing a real seesaw.<\/p>\n
\u201cThese events have led to a lack of foreign investment, which in turn results in the rand seesawing,\u201d said the head of product development at Everest Wealth, Thys van Zyl.<\/p>\n
He added that the rand is known for reacting to international events, and developments in the American financial market have already had a major influence on the currency this year.<\/p>\n
The country\u2019s trade balance also affects the rand\u2019s exchange rate. A significant trade deficit can also put pressure on a country\u2019s currency. If a country imports more goods and services than it exports, there is a greater demand for foreign currencies which leads to the depreciation of the domestic currency.<\/p>\n
\u201cIn the past ten years, South Africa has experienced several trade deficits, which has ultimately affected the rand,\u201d said Van Zyl.<\/p>\n
Additionally, the National Treasury has provided more bad news for the country\u2019s economy, expecting South Africa to fall short of its primary surplus budget goal for the fiscal year ending in February 2023.<\/p>\n
South Africa is a major exporter of commodities such as gold, platinum and coal, and the rand\u2019s value is also affected by the change in international commodity prices.<\/p>\n
\u201cIf commodity prices fall, this could negatively affect South Africa\u2019s export earnings, trade balance and the overall value of the rand.\u201d<\/p>\n
This is a crucial factor affecting the rand right now, as the Bureau for Economic Research (BER) noted<\/a> a decrease in critical South African export commodities, adding that there is little prospect of them turning around any time soon.<\/p>\n Announcements by central banks and monetary policy decisions have also compounded the rand\u2019s decline.<\/p>\n If a central bank follows a policy that increases the money supply or lowers the interest rate, it can cause the currency to weaken. These factors affected the rand\u2019s value relative to other currencies, especially during the Covid-19 pandemic.<\/p>\n As a result of several of these factors, the rand has weakened significantly since 2013.<\/p>\n As of 15 May 2013, the rand stood at R9.26\/$, R11.94.00\/\u20ac, and R14.10\/\u00a3. As of 15 May 2023, the rand had weakened by 105% against the dollar, 73% against the euro, and 69% against the pound.<\/strong><\/p>\n This is how the rand has performed against some of the world\u2019s largest currencies over the past 10 years:<\/p>\n
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