This morning, the South African Rand definitely got out on the wrong side of bed. Or fell off it.

ZAR USD trade 18 19 June 2018

So, like, why?

It sounds like an obvious question. And for the long-time readers of this blog, it might well be.


I spend a lot of time in SLOW lounges at the airport (about twice a week, at this point). And with the hours that I travel, I’m almost always surrounded by the boitjies of the local work travel scene. They arrive en masse, dressed in pink shirts and tan leather oxfords with the brogue detailing. There is usually a freshly purchased copy of the Economist in view – sometimes in hand, sometimes (artfully) half-tucked into the (also tan) leather attache.

They’re the “mezzanine mogul” crowd. Enough disposable income to buy fancy clothing, but not yet established enough to arrive at a work meeting in sneakers.

I mention them because those boys have lots of opinions. Expressed at a volume that reaches across rugby fields. Standard topics of conversation:

  1. Blockchain;
  2. “Yoh, this Rand – I thought Cyril was gonna fix it”;
  3. “Donald Trump and his tariffs are killing us, bru – I mean it”; and
  4. <sport>

They sound a lot like this, just with a Joburg/Capetonian accent:

And when it comes to conversations about the Rand and its fall*, there is a clear bias toward blaming the South African government.
*we only discuss depreciation – appreciation speaks for itself.

The trouble is…

The Rand is not entirely South African

Here is something that every South African should be aware of:

And this is especially surprising when you realise that any cross-border banking transactions denominated in Rand have to pass through the South African banking system.

This suggests that most of the daily Rand-linked trades – all of which affect the Rand’s market value – are only indirectly related to the South African economy (and its politics).


  • The Rand is the 20th most traded currency in the world; but
  • South Africa is only 39th in terms of Global Exports; and
  • 35th in terms of Global Imports.

Compare this to China:

  • The largest exporter; and
  • The 3rd largest importer; but
  • The yuan is only the 8th most traded currency in the world, representing only about $202 billion worth of trades (in comparison to the $4.4 trillion traded with the US dollar).
The Rand as proxy for Emerging Markets (and, specifically, China)

I mention China quite specifically, because the Rand always seems to move in reaction to news from China.

And here is the brief story of the Rand and the US-China potential trade war:

The Rand and the China-US trade war

It could be different. We could be one of those countries whose economy and domestic politics makes the currency more than just a proxy for a homogenous China-dependent emerging market.

But not today.