Nenegate, Brexit and Trump: Ho

Nenegate, Brexit and Trump: How the Rand dodged the curse of 2016

It’s no secret, the start to 2016 was, how shall we say, an interesting time for the ZAR. Reeling from the incredible decision of President Zuma to remove Nhlanhla Nene from his cabinet on 9 December, the local currency hit some staggering lows in January. But a year is a long time and things have changed. Just how did the Rand fare against the Dollar, the Pound and the Euro? Read on to find out.

Nenegate, Brexit and Trump: Ho

The Dollar and the Rand

The globe’s currency Big Kahuna, the Dollar, has had a solid year. As the world’s de facto reserve currency, the way the Rand performs against the greenback is usually a good indication of the overall health of the ZAR.

The Rand value of a Euro
December 2015 – January 2017


As you can see from the graph there were a few very important events that made the Rand lose serious ground against the Dollar. First, on December 9 there was Nenegate, then in the days following Brexit the Rand suffered once more as investors sought the safety of the Dollar.

By October the Rand had battled down to around 13.70 to the USD. Things were looking good for our plucky currency until the National Prosecuting Authority decided to charge Pravin Gordhan with a raft of charges around his establishment of an alleged “rogue unit” in SARS.

The news broke on 9 October and the Rand immediately shot up to 14.43, only to slowly come back from this oversold position as the days went on. This clawing back of the losses occurred largely due to the perception that the charges would never stick. On the 31 October the NPA withdrew charges and the Rand began to further settle.

Just as we were all starting to relax, Donald Trump won the US election on 11 November. In the days following the election no one was quite sure what currencies would do and many headed for the safety of developed markets. As a result the Rand once again breached 14.00 to the USD and fears of a further blowout began to be voiced. However, markets settled, the panic subsided and the ZAR has since strengthened.

Since November the Rand has traded in a broad range of 13.50 – 14.50 to the Dollar. It’s been a rocky unpredictable ride, that’s for sure.

Pound reels after the Rand’s tough start

One of the most keenly-watched currency pairs by South Africans, GBP-ZAR movement was extremely volatile this year. The key event in the last 12 months, as you may have already guessed, was the British public’s vote to begin leaving the EU.

The Rand value of a Pound
December 2015 – January 2017


Before the referendum on 24 June the Rand had struggled against the Pound flat-lining after the massive post-Nenegate slide.

However, the shock and panic following the Brexit vote sent the Pound tumbling as investors ran for cover. Sterling crashed (albeit briefly) to a 31-year low against the Dollar. In a matter of days after the referendum the GBP-ZAR was looking a little less disastrous for South Africans.

The Pound has yet to fully recover, or even stop its slide against the Rand and the major currencies, so if you’ve got some Rands and you’re thinking of buying some Pounds, this could be a good time to do so.

Remember: Don’t try play the currency markets.

Speculative forex trading has cost would-be currency traders thousands of whatever currency they’re trying to flip for profit. Always be sure there’s a good reason for transferring your money internationally, and never do so just for speculative purposes, unless you’re willing to make a potentially big loss.

Euro blues while the Rand hits snooze

It’s been a tough year for the Euro. Barely recovered from 2015’s Grexit and facing a much ballyhooed “migrant crisis” the Union has never looked more fragile. And all this was before we even got to the Brexit referendum in the UK!

While the Euro has been struggling for some time, the Rand still performed poorly against the EUR thanks to Nenegate and the other local events mentioned above. Rand weakness against the Euro this year was broadly on the back of the Rand being weak, rather than the Euro strengthening.

The Rand value of a Euro
December 2015 – January 2017


Notice after the UK’s referendum how poorly the Euro performed. This is in line with the broader trend for the EUR – ZAR for the year. In a year where we could have gained some serious ground on the Euro our politicians and bad luck seemed to conspire to prevent the Rand making some serious gains.

The rocky road to recovery

It’s clear that the Rand is often at the mercy of major global events like Trump’s election and Brexit. What’s more the currency has become increasingly sensitive to political infighting and uncertainty in South Africa. These events tend to spook investors who above all else, desire predictability.

Looking at the graph below you will also see that the Rand behaved in very similar ways when compared to all three major currencies This makes it clear that the Rand is moving the way it is because of its own inherent strengths and weaknesses. South African policy makers and government officials hold the fate of our currency in their hands.

The Rand vs the major currencies


9 December: Minister Nene sacked 9 October: Gordhan charged by NPA
24 June: UK votes to leave EU 11 November: Trump wins election

What is encouraging is that following a major disturbance, when the noise dies down and the dust settles, the Rand has continued to grind its way upward against all the major currencies. Not even the Fed’s hiking of US interest rates in December caused much of a dip in the ZAR’s performance.

Also encouraging is this analysis by Bloomberg of some of the Rand’s peers. As you can see the ZAR has had a pretty good year, all things considered.


Graph via Bloomberg

Having said all this, if we compare where we were in 2010 against the three major currencies, we realise that while 2016 may have reversed some of 2015’s losses, we are far from out of the woods.

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