Since the rand was introduced in 1961, it has lost more than 98% of its purchasing power against the US dollar. This isn’t a failure — it’s a normal feature of emerging-market currencies.
Understanding this long-term trend helps explain why many South African portfolios include foreign assets and why the rand cost of global investments usually rises over time.
100 Years of Rand Depreciation
Even before the rand existed, the South African pound tracked a similar path. The pattern is clear: in real terms, the currency loses roughly 4–6% per year against major developed-market currencies over decades.
R1 in 1961 → ~R0.015 today
Against the US dollar (2024)
~5.2% average annual decline
Long-term geometric average vs USD
Main Drivers of the Trend
Higher local inflation
SA CPI has historically run 2–4% above developed markets
Commodity price cycles
Terms-of-trade shocks affect emerging-market currencies
Political & policy risk
Periodic risk premiums demanded by global investors
Why Offshore Assets Benefit
A global index that returns 6% in dollars will deliver roughly 11–12% in rands over the long run because of currency movement. This effect has been one of the biggest contributors to offshore returns for South Africans.
MSCI World (USD)
- 1928–2024 real return: ~6%
Same index in rands
- Real return: ~11–12%
What History Teaches Us
The rand’s structural weakness is unlikely to reverse permanently. This reality — not speculation — is why diversification beyond the rand remains a core principle for most long-term South African investors.
“The rand will fluctuate.”
— Often attributed to John Maynard Keynes when asked
about the South African currency’s future.