Currency Of South Africa
- The currency of South Africa is the Rand. The rand is subdivided into 100 cents and was introduced on 14 February 1961 into the Union of South Africa, three months before the country declared itself a republic.
Yesterday we wrote a post about the Nigerian currency. And today we shall be focusing our time and research on the currency of South Africa.
South Africa is the most industrialized and diversified economy on the continent. And the second largest economy in Africa , after Nigeria.
There are very few countries in Africa that can be classified as upper-middle-income economy and South Africa is one of only eight such countries on the continent, including: Algeria, Botswana, Equatorial Guinea, Gabon, Mauritius, Namibia and Libya. 1
South Africa’s Gross Domestic Product almost tripled to a peak of $400 billion in 2011. But currently sits roughly at $385 billion in 2019.
The South African nation is among the G20 , and the country can seriously boast as the only African member of the group.
The G-20 promotes open and constructive discussion on issues related to global economic stability. By contributing to the strengthening of the international financial architecture and providing opportunities for dialogue on national policies, international cooperation, and international economic and financial institutions, the G-20 helps to support growth and development worldwide.
The members of the G-20 are the finance ministers and central bank governors of 19 countries: Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan, Republic of Korea, Mexico, Russia, Saudi Arabia, South Africa, Turkey, the United Kingdom and the United States of America.
Including the European Central Bank representing the EU. 2 The group was chaired by South Africa in 2007.
South Africa’s economy was greatly altered beyond agriculture, when diamonds were discovered in Kimberley in 1870 , while some of the world’s largest gold deposits were discovered in the Witwatersrand region of Transvaal 1886. A discovery that would quickly transform the economy into a resource-dominated one.
What Is The Currency Of South Africa?
The South African Rand!
The Rand is the official currency of south Africa. The rand is subdivided into 100 cents and was introduced on 14 February 1961 into the Union of South Africa, three months before the country declared itself a republic.
The South African currency is the legal tender in the Common Monetary Area between South Africa, Eswatini , Lesotho and Namibia. It is interesting to note that the last three countries have their own currencies pegged at par with the rand.
The rand was also the legal tender in Botswana . But the Botswanan pula in 1976, replaced the rand at par.
The name Rand, is taken from the same ridge upon which Johannesburg is built and where most of South Africa’s gold deposits were found.
The pound sterling was the standard currency of South Africa, first introduced to the Cape Colony in 1825 and gradually imposed on other states in southern Africa, such as the Orange Free State and the Transvaal Republic, as they were annexed by Britain.
It was replaced by the South African Rand as legal tender, at the rate of 2 rand to 1 pound, or 10 shillings to the rand.
When South Africa was declared a republic on May 31, 1961, the new currency was retained. It was valued at R2 to the pound, until 1967 when sterling devalued. 3
One rand was worth US$ 1.40 from the time of its inception in 1961 until late 1971, and the American dollar became stronger than South African currency for the first time on Monday, 15 March 1982. 4
The currency broke above parity with the dollar for the first time in March 1982, and continued to trade between R 1 and R 1.30 to the dollar until June 1984, when depreciation of the currency gained momentum.
The United Kingdom voting to leave the European Union, saw the rand drop in value over 8% against the US$ on 24 June 2016.
The first series of rand banknotes was introduced in 1961 in denominations of 1-, 2-, 10-, and 20-rand.
In mid-January 2020, the rand was trading at R14.41 to the dollar. In late April 2020, it was R19 to the dollar. In recent weeks, the rand has been trading at R18.20 to the dollar.
The South African Rand has been on a constant decline against the US dollars.
After People’s Bank of China devaluated the Yuan by 2% in mid-2015, the Rand lost close to 26% of its value during the next six months.
The Rand is among the list of currencies most exposed to China, which means any adjustments to Chinese foreign policy has a direct impact on the South African currency.
The South African Pound
The South African pound was the currency of the Union of South Africa from when it was created as a British Dominion in 1910 until it was replaced by the Rand in 1961.
Which means the Pound was once a currency of South Africa. The pound at that time was subdivided into 20 shillings, each of 12 pence .
The pound sterling became the standard currency of the Cape of Good Hope colony in 1825 following an imperial order-in-council.
The government of the Cape Colony issued a 1-pound note in 1835 and a 20-pound note in 1834.
The South African pound remained equal to the pound sterling throughout its existence, except for a brief period following the abandonment of the gold standard in the United Kingdom in 1931.
The South African pound rose dramatically in value against the pound sterling , and this virtually crippled South Africa’s gold export industry overnight. It remained so, until the gold standard was abandoned.
The South African Economy
What is considered formal economy in South Africa has started with the arrival of Dutch settlers in 1652, originally sent by the Dutch East India Company to establish a provisioning station for passing ships.
The National Party won the national elections in 1948, and immediately unleashed a race-based policy named Apartheid , that would effectively divide the economy into a privileged white one, and an impoverished black one.
South Africa’s economy is structurally diversified with key economic sectors including mining, agriculture and fisheries, vehicle manufacturing and assembly, food processing, clothing and textiles, telecommunication, energy, financial and business services, real estate, tourism, transportation, and wholesale and retail trade.
The country has since shifted from a primary and secondary economy in the mid-twentieth century to an economy driven primarily by the tertiary sector in the present day which accounts for an estimated 65% of GDP or $230 billion in nominal GDP terms. This is the economic structure supporting the currency of South Africa.
The economy has always been supported by the mining industry, serving as the main driving force behind the history and development of Africa’s most advanced economy.
Profit making from the mining industry started with the discovery of a diamond on the banks of the
Orange River in 1867 by Erasmus Jacobs.
In 2008, South Africa’s estimated share of world platinum production amounted to 77%; kyanite and other materials, 55%; chromium, 45%; palladium, 39%;
vermiculite, 39%; vanadium , 38%; zirconium , 30%;
manganese, 21%; rutile , 20%; ilmenite , 19%; gold, 11%;
fluorspar , 6%; aluminium, 2%; antimony , 2%; iron ore, 2%; nickel, 2%; and phosphate rock , 1%.
South Africa also accounted for nearly 5% of the world’s polished diamond production by value. The country’s estimated share of world reserves of platinum group metals amounted to 89%; hafnium , 46%;
zirconium , 27%; vanadium , 23%; manganese, 19%; rutile , 18%; fluorspar , 18%; gold, 13%; phosphate rock , 10%; ilmenite , 9%; and nickel, 5%. It is also the world’s third largest coal exporter. 5,