What happens when the rand drops?
Downward pressure on the value of a currency almost invariably leads to high interest rates and lower bond values. So as the rand depreciated, the margins spread and there was higher volatility. Those very factors gave rise to pressure on the interest derivatives and bond markets, which led to losses.
Why is it called rand?
Etymology. The rand takes its name from the Witwatersrand (“white waters’ ridge” in English, rand being the Dutch and Afrikaans word for ‘ridge’), the ridge upon which Johannesburg is built and where most of South Africa’s gold deposits were found.
What does a stronger rand mean?
The strong rand has been beneficial to inflation, as the cost of importing goods remains very low. Low inflation means that interest rates can remain low for longer, which benefits consumers and particularly the poor, as it preserves saving and spending power.
What is ZAR in economics?
The South African rand/US dollar (ZAR/USD) exchange rate (units of the rand per US dollar) has been more volatile than many other currencies. During the Asian currency crisis, the South African rand was affected and had depreciated as much as 41.5% from 4.53 rand per US dollar in 1997.
What causes rand to fall?
Short term global catalysts sparking the diminished appetite for emerging market assets such as the rand include: China’s Evergrande debt debacle and fear of contagion, the US debt Ceiling and slightly more hawkish Federal Reserve.
What is the future of the South African rand?
The rand weakened beyond R16. 00/USD by end 2021, pulling back in January on traditional increased risk appetite, but also on increased certainty on US monetary policy. The domestic currency is likely to remain volatile, unlikely to see substantial strength this year.
What country currency is rand?
South African rand/Countries
Where is a rand from?
rand, monetary unit of South Africa. Each rand is divided into 100 cents.
What does a weaker rand mean?
A weakened rand makes international imports more expensive, while simultaneously making South African exports more competitive in the global market. Essentially what this means is that the sales of South African products will increase on a worldwide scale.
Who benefits from a weak rand?
Local exporters benefit from the rand weakness in that it makes the goods and services that we produce cheaper for foreigners and more attractive when compared to the goods and services available in other markets,” the analyst pointed out. One of South Africa’s largest sources of income is its tourism industry.
What affects the rand dollar exchange rate?
The rand is a commodity-driven currency, the value of which fluctuates in accordance with supply and demand. Despite not achieving the average daily forex turnover of major currencies such as the dollar, the euro or the pound, the rand’s value still classifies it as one of the top 20 global currencies, she said.
What causes the rand to weaken?
Since South Africa relies more on mineral exports, low commodity prices have also led to a weakening of the Rand. Due to low economic growth, China’s demand for commodities have gone down resulting in lower global commodity prices. Investor confidence is yet another factor affecting the value of currency.