2½ Cents – South Africa

In 2015, South Africa's currency, the rand, faced significant volatility and depreciation, driven by a combination of domestic and international pressures. Domestically, the country grappled with severe electricity shortages due to mismanagement at the state-owned utility Eskom, leading to widespread load-shedding that crippled economic activity and investor confidence. This was compounded by persistent concerns over political instability, corruption scandals, and disappointing economic growth, which was projected to be below 2% for the year. These internal weaknesses made the economy highly vulnerable to external shocks.

The most profound external shock was the anticipation of monetary policy tightening by the US Federal Reserve, which strengthened the US dollar and triggered capital flight from emerging markets like South Africa. Furthermore, a dramatic slump in global commodity prices—particularly for key South African exports like platinum, gold, and iron ore—severely damaged the country's terms of trade and widened its current account deficit. This "perfect storm" of factors saw the rand lose over 25% of its value against the US dollar during the year, breaching the psychologically significant R14/$ mark and hitting a series of new all-time lows.

The currency crisis placed the South African Reserve Bank (SARB) in a difficult position. While aiming to support growth, rising inflation—partly imported via the weaker rand—forced the SARB to continue a gradual interest rate hiking cycle that began in 2014, further straining indebted consumers and businesses. The depreciating rand intensified economic pressures, contributing to higher living costs and social discontent, while also highlighting the country's deep structural challenges and its sensitivity to global financial sentiment.