South African Rand (ZAR)

What is South African Rand (ZAR)?

South African Rand refers to the legal currency of the Republic of South Africa. It is also recognized as a legal currency in the Common Monetary Area that it shares with Lesotho, Namibia, and Eswatini, although each country in the monetary union also uses its own currency.

The word “rand” is derived from “Witwatersrand,” the name of the high escarpment in South Africa, where the country’s capital city, Johannesburg, is located.

Like many dollar-denominated currencies, the rand is divided into 100 cents. All South African coins and banknotes are produced and issued by the country’s central bank, the South African Reserve Bank.

In the foreign exchange (forex) trading market, ZAR is the designation for the South African rand. For example, the exchange rate between the Canadian dollar and the South African rand is expressed as CAD/ZAR.

The Troubled History of the South African Rand

The South African rand was first produced in 1961, when South Africa became a republic. It replaced the South African pound, which used to be the legal currency of the Union of South Africa since it was established as a British Dominion in 1910.

The rand saw a fairly auspicious beginning, trading at an exchange rate of 1.40 US dollars to 1 rand for its first ten years in existence. Over the next decades, the rand’s value relative to other currencies declined substantially due to inflation and, more importantly, due to increasing international opposition to South Africa’s policy of apartheid – its institutionalized system of racial segregation.

By 1985, the rand was trading at an exchange rate of 2 rands to 1 US dollar, and South Africa even briefly suspended all foreign exchange trading in the rand in an attempt to stem the slide in the currency’s value.

Increasing political uncertainty as South Africa moved to dismantle its apartheid system and transition to what would become black majority rule led to a further decline in the rand’s relative value.

By 1992, the exchange rate was 3 rand per 1 US dollar, doubling to more than 6 ZAR/1 USD by 1999 and surging to nearly 14 ZAR/1 USD by 2001.

From 2001 to 2006, the rand recovered about half of its value relative to the US dollar, moving back to an exchange rate of approximately six-to-one (rand to dollar). But then, in 2012, a decline in the key South African industry of mining sparked a fresh decline for the rand. By 2014, it was trading at a rate of slightly more than 15 ZAR/1 USD.

The South African currency’s decline in value was further exacerbated by the country’s significant trade account deficit worldwide and by a slowdown in the economy of China, one of South Africa’s key trading partners.

The all-time low exchange rate for the rand relative to the US dollar was reached in 2016 when it hit an exchange rate of just below 18 ZAR/1 USD. In 2017, credit rating agency Moody’s rated the country of South Africa barely above junk status.

As of 2020, the USD/ZAR exchange rate is approximately 15 ZAR/1 USD. High rates of poverty, crime, political unrest, and unemployment continue to plague the country and the value of its currency.

South African Coins and Banknotes

The South African Reserve Bank mints and issues coins in denominations of 1, 2, 5, 10, 20, and 50 cents, and in denominations of 1, 2, and 5 rands. Banknotes are printed and issued in denominations of 10, 20, 50, 100, and 200 rands.

In 2012, the country began issuing its banknotes featuring an image of former South African President and anti-apartheid activist Nelson Mandela. In 2018, the country also issued commemorative banknotes of all its denominations, imprinted with new images of Mandela.

Learn More

CFI offers the Commercial Banking & Credit Analyst (CBCA)™ certification program for those looking to take their careers to the next level. To keep learning and advancing your career, the following resources will be helpful:

• Top Banks in South Africa
• Krugerrands
• National Currency
• Exchange Rate
• See all foreign exchange resources