The value of the Rand is largely determined by supply and demand. That is, how many Rands are available in our economy (supply) and how many people and institutions want to buy
the Rand (demand). We have a floating exchange rate (a regime where the currency price of a nation is set by the forex market based on supply and demand relative to other currencies).
As with any other currency, the balance of payments affects the value of the Rand (also known as the "current account"). The balance of payments is
the country's exports minus the imports and is either negative or positive. A negative current account means that SA imported more than we exported (we paid in US Dollar) and a
positive current account means that SA exported more than we exported (US Dollars were converted to SA Rand)
Inflation (largely the difference between South-Africa's and the USA's inflation rate), interest If we offer higher interest rates than other countries we will attract foreign investment and hence a demand for the Rand, and investor confidence also affect the rand (if there is world turmoil investors tend to flee to the US Dollar creating a greater demand for UD Dollars.
Please contact This email address is being protected from spambots. You need JavaScript enabled to view it. should you need any advice with regards to or our suite of products, services and solutions.
Author: Anton Schutte: General Manager and Certified Financial Planner CFP®: PWG Group