20 Rand – South Africa

In 2011, South Africa's currency, the rand (ZAR), was characterized by significant volatility and a weakening trend against major currencies like the US dollar. This period followed the global financial crisis, and while the domestic economy was in a fragile recovery, the rand was heavily influenced by external "risk-on, risk-off" sentiment. As a commodity-linked currency, it benefited from high global prices for gold, platinum, and other exports, but remained vulnerable to shifts in international investor appetite for emerging market assets. Domestically, concerns over slow economic growth, high unemployment, and current account deficits added underlying pressure.

A key feature of the 2011 landscape was substantial capital inflows into South African bonds and equities, attracted by relatively high interest rates. However, these "hot money" flows were seen as fickle, amplifying the rand's sensitivity to global events. The European sovereign debt crisis, which escalated in 2011, triggered widespread risk aversion, leading to sharp, sudden sell-offs of the rand as investors retreated to safe-haven assets. This resulted in a pronounced pattern: the rand would strengthen during calm periods on yield-seeking flows, only to plummet during bouts of global market turmoil.

Monetary policy was in a delicate balancing act. The South African Reserve Bank (SARB), under Governor Gill Marcus, had lowered the repo rate to a historic low of 5.5% in late 2010 to stimulate growth, which contributed to the rand's attractiveness for carry trades. However, by 2011, rising inflation—driven by higher fuel and food prices—began to limit the scope for further easing. The SARB's primary mandate to anchor inflation constrained its ability to intervene directly to support the currency, leaving the rand largely at the mercy of global forces and commodity cycles throughout the year.