Rand to Dollar Exchange Rate

Current Exchange Rate for Rand to Dollar

Before you proceed to make any purchase of any goods online or in a foreign country as a South African, endeavor to confirm the current exchange rate.

The current exchange rate for rand to dollar

1 United States Dollar equals 14.01 South African Rand, 21 Feb.

Brief History of the South African Rand

Just like it was already mentioned in our previous article on current exchange rate for pounds to South African Rand, that rand is the official currency of South Africa and it was officially in use on 14 February 1961. Rand has since been mostly and commonly trading against the US dollar. Rand has developed into a liquid emerging market currency that other countries find attractive.

Prior to the time South African rand was officially in use back in 1961, South Africa has only been operating with  pence, pounds and shillings since Britain was her colonial master.

When the rand debuted, it traded at R2 to the pound, or 10 shillings to the rand. Coming off of the strong base of the “South African Pound” was valued, as a yearly average, stronger than the US dollar, debuting at 72 cents to the dollar in 1961.

What exactly is Exchange Rate in Currency?

An exchange rate can be defined as the rate at which a particular currency will be exchanged for another in finance term. It can also be referred to as the value of one country’s currency in relation to another currency.

The foreign exchange market determines the exchange rates, which is open to a wide range of different types of buyers and sellers where currency trading is continuous.

The current exchange rate is referred to as the spot exchange rate.

An exchange rate that is quoted and traded today but for delivery and payment on a specific future date is known as the forward exchange rate. Different buying and selling rates are quoted by money dealers in the retail currency exchange market. The buying rate is the rate at which money dealers will buy foreign currency, and the selling rate is the rate at which they will sell that currency.

The quoted rates will incorporate an allowance for a dealer’s margin (or profit) in trading, or else the margin may be recovered in the form of a commission or in some other way. Different rates may also be quoted for cash, a documentary form or electronically. The higher rate on documentary transactions has been justified as compensating for the additional time and cost of clearing the document. On the other hand, cash is available for resale immediately, but brings security, storage, and transportation costs, and the cost of tying up capital in a stock of banknotes (bills).

Comparison between Rand versus Dollar since 2002

Years back have been the most wonderful years especially in the latter half of the decade which is around 2007, where South African rand had it own fair share of issues which impacted the rand/dollar exchange rate.

Local events, such as increasing debt, socio-political unrest and energy issues have kept the rand in a weakened position.

Some of the indigenous companies like Eskom’s power which caused crisis in 2007 caused serious issues in the mining and media communications division, at last prompting huge production cuts and mine terminations. This made the rand’s esteem shoot up from simply above R6 to the dollar in 2006, to over R7 in 2007.

Most as of late, the European sovereign obligation crisis has massively affected the world economy and, by augmentation, the local currency.

The euro- crisis is in itself an augmentation of the world recession which pursued the ” global financial crisis” in 2007 – which sent world markets, South Africa notwithstanding, into financial issues.

By 15:00pm (12 September 2012) the rand was trading at R8.34 to the dollar, under strain from distress in South Africa’s mining area, just as continued uncertainty relating the euro-zone crisis.

Facts about the Us Dollar

• The US Dollar has been for years the world’s most traded currency in the world.
• The US Dollar is the most currency even in Forex trading, since it gives the benchmark and target rate for countries that fix or peg their currencies against its value.
• The world’s unofficial reserve currency, it can be found in most major currency pairs.

Facts about the South African Rand

• The rand is the official currency of South Africa, introduced in 1961.
• It’s also legal tender in Swaziland and Lesotho and accepted in Namibia.
• The South African Rand tends to fluctuate greatly in response to domestic and global crises.

What affects US Dollar to South African Rand Exchange Rates?

The policies of the Federal Reserve

When the Fed stops distributing dollars (as just one example), it restricts the money supply. Hence, demand goes up.

Economic uncertainty in the world

The US dollar is often seen as a safe investment, and it’s often purchased more aggressively during global crises.

Exports from Japan and China

Both countries buy dollars to stabilize their currencies. This helps them create cheaper exports, which in turn makes their exports more attractive to world buyers.

Global commodity prices

South Africa is a big exporter of commodities like minerals and precious metals. Because of this, commodity prices around the world have a major effect on the rand.

Foreign investment

Foreign investors are attracted to South Africa for capital investments. However, they can also pull money out of the country if they see lucrative opportunities elsewhere (for example, if the US recovers after a recession).

History of Rand to Dollar Exchange Rate

Conclusion

To make purchases of anything on foreign sites with South African Rand, you will have to make thorough confirmation before you end up spending more than what you budgeted.

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