The South African rand (ZAR) is considered to be an exotic currency in the Forex market. It is also one of the “commodity” currencies because of the economy’s dependence on commodity exports.
South Africa is the world’s twenty-fifth largest economy.
Does Your Economy Run a Trade Surplus or a Trade Deficit?
South Africa runs a trade deficit of $16.51 billion, giving the country a ranking of 178 out of the 190 countries tracked by the CIA in The World Factbook.
What Does Your Economy Export?
South Africa exports gold, diamonds, platinum, other metals and minerals, machinery, and equipment.
According to the World Trade Organization (WTO), South Africa exports $62.6 billion in goods and merchandise compared to only $14.3 billion in commercial services. The WTO breaks down those exports as follows:
Goods and Merchandise
- Agricultural products: 10.7 percent
- Fuels and mining products: 34.8 percent
- Manufactures: 51.8 percent
Commercial Services
- Transportation: 11.8 percent
- Travel: 65.5 percent
- Other commercial services: 22.7 percent
To Whom Does Your Economy Export?
The WTO ranks the following countries as the top destinations for exports from South Africa:
- European Union: 26.5 percent
- China: 10.5 percent
- United States: 9.0 percent
- Japan: 7.6 percent
- Switzerland: 4.2 percent
What Does Your Economy Import?
South Africa imports machinery, equipment, chemicals, petroleum products, scientific instruments, and foodstuffs.
According to the WTO, the country imports $73.2 billion in goods and merchandise compared to only $14.3 billion in commercial services. The WTO breaks down those imports as follows:
Goods and Merchandise
- Agricultural products: 7.4 percent
- Fuels and mining products: 23.3 percent
- Manufactures: 68.3 percent
Commercial Services
- Transportation: 41.2 percent
- Travel: 28.9 percent
- Other commercial services: 29.9 percent
From Whom Does Your Economy Import?
The WTO ranks the following countries as the top sources of imports to South Africa:
- European Union: 32.2 percent
- China: 13.1 percent
- United States: 7.8 percent
- Saudi Arabia: 5.0 percent
- Japan: 4.9 percent
Do You Have an Attractive Government Debt Market?
South Africa currently has a Moody’s rating of Al. It received this latest rating on July 16, 2009. This most recent rating was an upgrade from the A3 rating that the country had held previously. This is a positive sign for the country’s government debt market.
Do You Have an Attractive Equities Market?
South Africa has an attractive equities market. It is the eighteenth largest equities market in the world, with a total market value of $704.8 billion.
Tell Me About Your Central Bank. What Are Its Mandates?
The South African Reserve Bank (the SARB) is the central bank of the Republic of South Africa. It regards its primary goal in the South African economic system as “the achievement and maintenance of price stability.
The South African Reserve Bank has foreign currency reserves of $35,427 million and gold deposits of $5,654 million.
Do You Have an Over-involved Government?
The South African government is not known as an aggressive currency manipulator.
What Economic Announcements Are Important to You?
When you are watching the economic announcements coming out of South Africa, make sure that you keep your eye on the following:
- Interest rates
- Employment
- Inflation
- Gross domestic product (GDP)
- Trade balance
How Can I Trade You?
You can trade the South African rand using any of the following:
- Spot Forex
- Forex futures
- Exchange-traded funds (ETFs)
- Spot Forex options
- Exchange-traded Forex options
