In South Africa, the currency used is called the Rand. While the South African Rand has seen some fluctuation over the years, forecasters are highly optimistic that once the FIFA World Cup occurs in the summer of 2010, the economic structure will flourish. In fact, for the year 2010, experts are predicting that this country’s financial position will grow as much as 2.3%.
Interestingly, the South African Rand, which is under the ISO Code of ZAR, has reached an extremely high point when the Finance Minister announced budget deficits while choosing to ignore demands for inflation targeting to be eliminated. In fact, at this time the South African Rand saw an increase of value up to 1.4%, going to 7.57 when compared to the United States Dollar. With this announcement and the action that will follow, it is believed that unemployment and poverty in South Africa will decrease dramatically.
Inflation in South Africa will be targeted to a rate of 3% and 6% by the Reserve Bank. While some people though monetary policies were too conservative and focused on keeping resources from being misallocated, the opposite has been seen. What the country’s officials do know is that poverty must be carefully managed and if this does not happen, the South African Rand will decrease in value. At that time, not only would the currency be affected but also, taxable components of income would increase.
Keep in mind that the South African Rand was valued more than the United States Dollar since first being created in 1961 and remained ahead until 1982. However, at that time political pressure was put on the country, as well as sanctions due to value eroding from apartheid. Then in March of 1982, the South African Rand was trading around 1.30 to $1 US Dollar, which continued until the summer of 1984.
This increase in value kept rising and by the start of 1985, the South African Rand traded at 2.0 for every $1 US Dollar. Unfortunately, in the summer of that same year, Rubicon, the State President, gave a speech that lowered the value to $2.40. It took almost three years for the Rand to recover but unfortunately, this was only temporary. At the end of 1989, the Rand was devalued even more at 2.50 to $1 US Dollar.
With this occurrence, country officials could see that the South African Rand was in trouble, which lead to several reforms being announced but this only made the problem worse when in the fall of 1992 the Rand was at 3.0 to $1 US Dollar. This was not the end of it however in that after the democratic election in 1994, the South African Rand weakened even more to 3.60. In fact, by 1999, the Rand briefly hit 6.0 to $1 US Dollar.
While a plan for reform was organized and starting to be implemented, the attacks in New York City caused the South African Rand to hit a historical low in December of 2001 when it ended up at 13.84. This resulted in a formal investigation being conducted, which actually helped the Rand recover and by the end of 2004, it was again trading at 5.70. While the South African Rand still has more recovery to do, it appears it is moving in the right direction.
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