The South African rand continued its impressive rally against the US dollar, reaching at some point R11.92 against the US currency – it was trading at 11.93 at the time of this report.
The last time the South African currency traded at figures between 11.92 and 11.93 to the greenback was on 1 April 2015.
The rand is one of the world’s most volatile currencies, and in past decade, has lost more than 44% of its value – even with this latest rally of 11.92 against the US Dollar.
South Africa operates a flexible exchange rate regime, which means, according to Fatima Bhoola, who is a Lecturer of Economics at the University of Witwatersrand, that the “value of the rand, like any commodity, is determined by the market forces of supply and demand. The demand for a currency relative to the supply will determine its value in relation to another currency.”
The rand is, however, relatively overtraded and is the subject to a lot of foreign exchange speculation, and therefore volatility – mainly fueled by daily political developments and public policy shifts. Most daily trades of the South African rand happen outside of the country.
