Did Zuma destroy the Rand?

2015-08-14 13:44

The Rand touched R12.88 to the US Dollar today, bringing the 2015 depreciation to 11.6% and the last 12 months to a gut wrenching 22%. The Rand is effectively the share price of SA,Inc and the natural response to this kind of depreciation is to blame the current administration. Under the Zuma administration, the R/$ exchange rate has risen a staggering 54 percent so far!

Did Zuma destroy the Rand? The answer is "Yes, but..."

At 54% rise in the exchange rate to the dollar during Zuma's tenure, the answer to the above question is a definite "Yes". However, EVERY pre and post-apartheid SA President since PW Botha has presided over a Rand slide. Nobody, except maybe Thabo Mbeki escaped a large depreciation. Given that Thabo Mbeki ran for just under 2 terms it is rather remarkable how the Rand held up during his tenure. In the 31 years since PW Botha's apartheid regime, the Rand exchange rate has risen 675% against the dollar, or 6.8% per annum compounded.

Below is an info-graphic showing the absolute and annual compounded rise in the R/$ exchange rate during the terms of the last 6 SA presidents:

Every president was in office for different amounts of time, some reaching (but not yet completing) two terms. For this reason it is more fair to examine the Rand/$ rate appreciation per annum during their tenures to compare apples with apples, as with the bottom of the info-graphic.

The Zuma administration is currently the third worst at 7.1% per annum compound, but it has three years left in its term and if the long term depreciation rate of the Rand remains in place, the Zuma administration would have presided over the worst Rand slide of 86%, worse than the 69% of the now infamous PW Botha.

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