Convert Rand to US Dollar Exchange Rates: Current Daily Currency Exchange Rate For Rand, Dollar, Pound and Euro – August 2018
What is Rand to Dollar, Euro, Pound exchange rate for today? The exchange rate has been an important subject matter of discussion and will continue to be so long as global trade and commerce continues to exist. The changes that occur in exchange rate values are so critical and interwoven with information on how an economy is faring.
In a situation where a country’s currency exchange rate depreciates in value, the more the depreciation, the worse it is for the economy. Factors like inflation, international capital flight caused by the liquidation of investments/assets by foreign investors, and a drop in foreign investments are common place.
On the other hand, a stronger exchange rate implies that investors will naturally be drawn to the economy because it is an indicator that a country’s economy is doing well. However, its effects can be either beneficial or harmful to an economy.
In an event that an economy is import dependent, a stronger exchange rate value will benefit such an economy, while an export dependent economy will witness a negative growth in addition to a much reduced value of its asset overseas.
This article focuses on the dollar to rand exchange rate value usually denoted as (ZAR/USD). With the recent volatility witnessed by the South African Rand compared to other currencies, and mainly driven by a fiscal policy that allows for floating of the South African Rand, under a new fiscal regime that seeks to create an enabling framework for market forces of demand and supply to determine the exchange rate value, this policy has set the right atmosphere for a market forces driven exchange rate value.
The Current ZAR/USD Exchange Rate
As it stands today, the exchange rate of the South African Rand (ZAR) to the United States Dollar (USD) (ZAR/USD) stands at 14.46 to the dollar (that is, 1 USD =14.46 ZAR). This is true of an economy that largely depends on gold mining and tourism, it means that its exchange rate performance depends on how well its tourism industry and its mining industry perform among other sectors of the economy.
A drop or crash in gold prices in the global marketwill significantly affect its exchange rate value against the dollar which is the international currency of trade. This is also true of an appreciation in the price of gold at the international market.
The South African tourism industry as well depends on the foreign currency inflows which come in whenever tourists visit South Africa. In the event there is a global terrorist threat alert, the global tourism industry is affected as tourists are more cautious of travelling due to safety concerns.
Some Factors That Contribute to the Dollar to Rand Exchange Rate Movements
There are several contributory factors that result in the exchange rate movements between the dollar and rand. Some of these factors include;
- Political Stability or Uncertainty/Instability
Political stability or uncertainty can serve as a major determinant of the exchange rate value between the South African Rand and the United States Dollar. This factor in most cases results in volatility with several effects on the economy. Some of these might include an increased investor confidence in the South African Economy in terms of Stability or decreased investor confidence on the South African economy in terms of uncertainty/instability.
Investor confidence resulting from stability results in increased Foreign Direct Investment (FDI) inflows into the South African economy, while uncertainty about the economy creates the reverse, which results in reduced Foreign Direct Investments (FDI’s) into the economy
What Contributes to Exchange Rate Volatility?
With focus on the dollar to rand exchange rate value, it is important that a clear understanding of factors that contribute to the exchange value volatility be made, as it would help in addressing these problems through effective policy recommendation and strategies that would return the exchange rate value back to reasonable levels.
Because external factors such as the global commodity price instability and the volatility witnessed in the financial markets cannot be controlled, it is only wise that factors that contribute in the absorption of financial/economic shock be put in place to guard against any future economic disasters. These measures include the building the foreign reserves as well as emphasising on increased export of finished goods and lesser emphasis on export of unfinished goods.
Other Ways of Increasing the Value of the Rand VS the Dollar
There are however other effective ways of increasing the value of the rand to the dollar. Encouraging the patronage of locally made goods and services is an important step in creating lesser demand for the dollar for services that can ordinarily be obtained within the country.
Without this policy, there would be undue stress on the foreign reserve of a country, resulting in the depletion of the foreign reserves which is an important buffer that protects the economy from shocks in the event of a global volatility or economic crisis.
This article pays special attention to the dollar exchange rate value. The exchange rate values are not fixed, as they continually witness fluctuations. However, in the event that these fluctuations are beyond the acceptable levels, resulting in volatility, then adequate measures that include the introduction of effective fiscal policies need to be made.