The rand was introduced as South Africa’s currency on 14 February 1961 which means it is celebrating its 60th anniversary today.
A Decimal Coinage Commission was established in 1956 to look at South Africa’s currency and 8 August 1958 it recommended replacing the British Pound with a new currency named “rand.”
The rand officially replaced Pound Sterling as legal tender and pounds on 14 February 1961 and pounds, shillings, and pence were replaced by rands and cents.
To inform the public about the new currency, the government introduced a mascot called Daan Desimaal who was accompanied by a radio jingle.
The change in currency happened just three months before South Africa declared itself a republic and left the Commonwealth of Nations on 31 May 1961.
When the rand replaced the British pound in 1961, the exchange rate was approximately R2 for £1.
Over the next two decades the exchange rate remained fairly stable and even strengthened in the seventies.
In the eighties, however, the value of the rand started to erode following sanctions and international isolation because of the apartheid system.
Since then, there was a consistent weakening of the rand against major currencies like the British pound and US dollar.
The rand weakened to a record low of over R25 to the British pound in 2020, but has since strengthened and is now trading at around R20 to the pound.
According to investing.com, the rand’s highest value against the British pound was 1.40, while its lower value was 25.22.
The chart below shows the performance of the rand against the British pound over the last fifty years.
The weakening of the rand means prices of goods and services increased in South Africa which is clearly seen in the country’s inflation rate.
Inflation as measured by the consumer price index is the key indicator of the changing value of money.
South Africa has produced some form of consumer price index since at least 1895. Stats SA provides inflation figures back to 1911 on its website.
Between 1961 and 2020, prices increased by almost 97 times. What this means is that a basket of goods and services costing R100 in 1961 would have cost almost R9,700 in 2020.
In February 1961 annual inflation was 1.6%, and the average for the whole of 1961 was 1.9%.
The 1960s was a period of generally low inflation, reaching a peak of 4.6% in November 1966.
Inflation climbed during the 1970s and 1980s to reach its highest recorded level of 19.7% in September 1986. Annual inflation has averaged 8% in the period since the rand’s introduction.
The household fuel & light and transport categories were the main drivers of inflation in 1961, both registering annual rates of 3.5%. Food inflation was 2.1%, and clothing and footwear recorded no increase in 1961.
Stats SA provided an interesting look back at how prices changed between 1961 and today, as shown in the image below.