DEFINITION of ZAR (South African Rand)
The symbol USD/ZAR is the currency abbreviation for the South African rand (ZAR), the currency for South Africa. The South African rand is made up of 100 cents and is often presented with the symbol R. The rand comes from the word "Witwatersrand" which means "white waters ridge". Johannesburg, the location of the majority of South Africa's gold deposits, is located on this ridge.
BREAKING DOWN ZAR (South African Rand)
The South African rand was first introduced in February 1961, just before the Republic of South Africa was established. The rand replaced the South African pound at a rate of 2 rand to 1 pound. Up until the early 1970s, the rand was worth around R1.5 per U.S. dollar. However, over the ensuing decades the rand has depreciated at a rapid rate, with substantial moves at the turn of the 21st century, and during the Great Recession.
As the political landscape changed in the early 1990s, the uncertainty saw the rand slowly depreciate to record low levels. The fall was exasperated when in 2001 the land reforms began to kick off. Soon after, the September 11 attacks saw global uncertainty hit and the rand take another steep dive, falling to R13 per U.S. dollar.
After steadying through the early parts of the century, the rand was one of many emerging market currencies that plummeted during the financial crisis. As investors flocked to safe haven currencies such as the U.S. dollar and the Japanese yen, emerging market currencies suffered. In the span of 12-months the rand fell by nearly 50 percent against the U.S. dollar.
Today, the rand is somewhat correlated with gold prices as the South African economy is reliant on its gold exports. However, as a fragile economy and unstable political landscape the rand is at the mercy of global uncertainty.