The rand as a global “powerhouse”
The chart below shows the rand losing just 3% against the USD in 2024, a shade behind the Indian rupee and Chinese yuan.
The list is astonishing in many ways. Look at what happened to the Brazilian real and Argentine peso, both losing more than 21% against the USD.
The rand performed better than the euro, which is being decimated (relatively speaking) by the deindustrialisation of Germany and, to some extent, the rest of the continent.
What kept the ZAR relatively firm was the Government of National Unity and some sensible policies coming out of the finance ministry, such as reining in inflation and debt. A different election outcome in May last year might have had an entirely different effect on the ZAR. Let’s also not forget the carry trade, where money is borrowed cheaply abroad and invested in higher-yielding assets in SA. That has picked up in recent months and helps stoke demand for ZAR.
Not shown in the list is the Nigerian naira, which lost 40% of its value against the USD in 2024. Nor does it show the Zimbabwean ZiG, down more than 43% in less than a year – another catastrophic experiment in currency debasement.
What’s the point of saving if you lose nearly half of that in a single year?
The ZAR went through this post-Covid when it lost a quarter of its value.
The USD remains the global reserve currency for a reason.
Africans have figured out a solution to this – USD stablecoins such as Tether. If you’re a company operating in Africa, holding your cash reserves in Tether makes sense. It protects you from the kind of debasement we have seen in Nigeria and Zimbabwe.
