USD ZAR (South African Rand) This is a brief introduction to the exchange rate between the US Dollar and the South African Rand. USD ZAR (Sudanese Rand) was and still is legal tender in South Africa, Swaziland, Lesotho, Namibia and Zimbabwe after trading away from the Pound after moving away from the Dollar. One of the most stable countries in Africa, South Africa has an economy based on livestock, mining and wood. It also has a major gold mining deposits.
There is a current deficit between the USD and the rand and this gap is expected to widen in future. This means that the value of the Rrand against the Dollar will likely decrease. This has resulted in a lot of speculations as to whether this will result in a depreciation of the South African Dollar or just a moderate increase.
On the contrary, the speculations seem to be baseless. There have been instances when the exchange rate did decrease by several percent in a short period of time. However, the fall was more than just a minor rate reduction and was accompanied by news that indicated that the US was considering a possible trade war with the rest of the world over steel. Hence, a further decrease in the US Dollar exchange rate against the rand would not be adverse to South Africa. It is likely that the trade flows between the USD and the rand would remain wide and strong in the future.
The current scenario highlights that the economic policies of both the countries are geared towards boosting trade flows. The rand has become a popular Forex currency pair due to its potential to increase in value despite the economic slowdown in South Africa. This has made it one of the most attractive investment opportunities available. At the same time, the availability of fixed income schemes has made it more feasible for wealthy South Africans to park their money abroad.
One of the major reasons why the rand is in such high demand from European and American investors is the prospects for appreciation of the South African Dollar. This is likely to make the currency stronger against the USD, especially if the economy of the country begins to show signs of improvement. An appreciation of the USD would provide investors with a greater sense of security. Apart from this, a US decision to remove sanctions on certain commodities such as oil could also assist the country’s exports.
The last few years have seen a dramatic decline in the economic performance of the country. The declining economy is likely to have a major impact on the exchange rates. This is especially so if the global economy shows signs of recovery. However, it is important to remember that the current circumstances are highly dependent on the policies of the American and European Union. If these fail, then there is a chance that the values of their currencies will depreciate.
This is unlikely at this time as the US and EU have shown little inclination to antagonize each other. The recent spat over the introduction of the Global Financial Arbitration Act into US law is another example of investors being concerned about the political situation in South Africa. There is a perception that the introduction of this legislation could weaken the role of the banks in the financial market. In addition, there are concerns that it will make it difficult for companies to get loans from international creditors. In short, there are plenty of factors that contribute to the uncertainty of the present position of the rand and this explains why the Forex market has been hesitant to take any major moves in its direction.
However, despite the uncertainties, the fact remains that the chances of a sharp increase in the value of the RMD are remote. Despite the fact that there are some analysts who are speculating that it might rise by 200%, it is a safe bet to say that it will remain low for the time being. There is no reason why traders should sell off their portfolios when the investment is low, and a smart investor would rather hold onto his portfolio and wait for an uptrend in the market before selling it out. There are other emerging economies that have shown much promise in the area of economics and the outlook for their currencies is also looking strong and promising, making the global economy very attractive to investors.