5 Rand – South Africa

In 2010, South Africa's currency, the rand (ZAR), was characterized by significant volatility and strength, largely influenced by global capital flows rather than domestic economic fundamentals. Emerging from the 2008-09 global financial crisis, the rand rebounded sharply, appreciating nearly 30% against the US dollar between March 2009 and the end of 2010. This surge was primarily driven by "risk-on" investor sentiment, as South Africa's relatively high interest rates and deep, liquid financial markets attracted substantial foreign capital seeking yield, particularly into the bond and stock markets.

This strong currency presented a complex dilemma for policymakers and the economy. On one hand, it helped contain inflation by making imports cheaper, providing the South African Reserve Bank (SARB) room to keep interest rates at historically low levels to support post-crisis recovery. On the other hand, it severely pressured exporters and manufacturers, whose goods became more expensive on the global market, undermining the government's goals for industrial growth and job creation. The strong rand was a contentious issue, with labour unions and industry leaders frequently calling for intervention to weaken the currency and protect local industries.

Underpinning this situation were persistent structural challenges, including a large current account deficit, which hovered around -3% of GDP, making the rand vulnerable to sudden shifts in global investor sentiment. The government and the SARB generally maintained a policy of a floating exchange rate, with limited direct intervention, focusing instead on accumulating foreign reserves. As the year closed, the currency's strength amid high domestic unemployment and inequality highlighted the disconnect between financial markets and the real economy, setting the stage for continued debate over currency management in the years following the 2010 FIFA World Cup.